Yeezy Stock Sales Improve Outlook for Adidas
Adidas, the German sportswear giant, has raised its earnings outlook for the year after experiencing high demand for its remaining stock of discontinued Yeezy merchandise.
The company now anticipates a €450 million ($491 million) operating loss in 2023, a significant improvement from the €700 million ($764 million) loss forecasted in March. Additionally, sales are expected to decline less than originally projected.
The positive revenue expectations stem from the success of the first sale of Yeezy inventory, generating €400 million ($437 million) during the second quarter. Yeezy is a brand previously associated with the rapper Kanye West, who was terminated from his partnership with Adidas in October due to offensive and antisemitic remarks. Despite the separation, the company was left with a substantial inventory of Yeezy shoes.
Adidas CEO, Bjørn Gulden, revealed that they have already sold between 20% and 25% of their Yeezy stock. Another batch of Yeezy inventory will be made available for sale in August, promising further opportunities for revenue.
Notably, Adidas announced that its 2023 outlook does not include the projected revenue from the second Yeezy release. Instead, the company plans to donate a significant portion of the sale proceeds to organizations combatting discrimination and hate, including racism and antisemitism.
China proved to be a strong market for Adidas, with revenues rising by 16% during the second quarter. However, the company acknowledges that global economic challenges may continue to impact its outlook, particularly concerning the uncertain recovery in Greater China, North America, and Europe.
Investors responded positively to the news, with Adidas’ stock rising by 1.1% following the earnings update. Since the start of the year, the stock has surged by 42%, as investors place their hopes on CEO Bjørn Gulden to revitalize the company’s performance.
