German footwear brand Adidas announced Tuesday in a full-year guidance it expects around $106 million in operating losses this year—a more than $600 million improvement from its expected losses near the start of the year—after it raked in massive gains from the sale of unsold Yeezy shoes designed by Kanye West, who lost his partnership with Adidas after a string of antisemitic comments.
Adidas will report its full third-quarter results on November 8. (Photo by Costfoto/NurPhoto via Getty Images)
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Key Takeaways
- Adidas expects about $106 million in operating losses this year, a sharp cut from the $491 million in expected losses it reported more than two months ago, and an even bigger improvement from the $740 million in year-end losses projected in February.
- The company cited the sale of its remaining Yeezy inventory and development of its underlying business as the reasons for the cut.
- The company’s underlying operating profit is now expected to reach around $106 million this year after previously sitting at a break-even level, according to Adidas’ updated guidance.
- Adidas sold more than $400 million in Yeezy merchandise in the second quarter.
Tangent
Shares of Adidas closed up nearly 5% to $94.61 Tuesday, the highest price it’s reached in the past month.
Key Background
Adidas nixed its partnership with West, the creator of the popular Yeezy product line, last year, when the rapper made a series of antisemitic comments on social media. In May, Adidas announced it would start selling some of its existing Yeezy products and donate a “significant amount” of the sales money to organizations combating racism and antisemitism.
The company reported $437 million worth of Yeezy sales last quarter, a figure it said was in line with Yeezy sales during the same quarter last year, confirming interest in the brand hadn’t dipped after West’s comments and his removal as a partner. However, the removal of West wasn’t exclusively good news for the company, which said in its last earnings report that the discontinuation of the Yeezy business cost it around $437 million in the first half of this year.
