BERLIN (dpa-AFX) - German sports sneaker and apparel maker Adidas AG (ADDYY.PK, ADDDF.PK) said it expects currency-neutral sales to decline at a high-single-digit rate in 2023. It also projects underlying operating profit to be around the break-even level.
'The numbers speak for themselves. We are currently not performing the way we should', said adidas CEO Bjorn Gulden.
While the company continues to review future options for the utilization of its Yeezy inventory, the guidance already accounts for the significant adverse impact from not selling the existing stock, the company said in a statement.
Adidas, which last October terminated its partnership with American rapper Kanye West, said not selling its existing Yeezy stock could reduce revenues by around 1.2 billion euros and operating profit by around 500 million euros in 2023.
Should the company irrevocably decide not to repurpose any of the existing Yeezy product going forward, this would result in the write-off of the existing Yeezy inventory and would lower the company's operating profit by an additional 500 million euros in 2023. In addition, adidas expects one-off costs of up to 200 million euros in 2023. The costs are part of a strategic review the company is currently conducting aimed at reigniting profitable growth as of 2024.
The company expects to report an operating loss of 700 million euros in 2023 if it does not sell off excess Yeezy inventory.
adidas reported that its preliminary net income from continuing operations for fiscal year 2022 dropped to 254 million euros from 1.49 billion euros in 2021.
Operating profit for fiscal year 2022 was 669 million euros compared to 1.99 billion euros in 2021.
Annual revenues increased 1% in currency-neutral terms. In reported terms, sales were up 6% to 22.51 billion euros in 2022.
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