The termination of the partnership with the American rapper Kanye West last October had a high price tag for Adidas with the company estimating lost earnings of 1.2 billion euros should they fail to sell the remaining inventory, writes Gabriel Debach, Market Analyst at eToro, on Adidas’ earnings.
. West is more popular than Messi and the World Cup, as Adidas sponsorship fails to yield the desired sales to offset the losses from the breakup.
Adidas gave the fourth profit warning in less than six months, with the company looking for a drastic change under the new leadership of new CEO Bjorn Gulden who stated that 2023 is a year of transition and uncertainty amid the high risk of recession in Europe and North America and a slow Chinese recovery.
Last month, the company surprised investors by releasing its preliminary 2022 earnings triggering the stock to fall and closing down by almost 11%. Today’s update does not offer reassuring guidance but invites investors to be confident and above all patient, with dividends being cut for the entire year by 79%.
It seems decisions based on ethics and morals are still secondary for markets, and a company can only ‘adapt or die’ to remain competitive and sustainable in the long term.