Adidas North America Revenue Falls 25% in Q4 Without Yeezy

Adidas reported fourth quarter financial results on Wednesday that showcase the challenges the German sportswear giant continues to face amid the fallout from discontinuing its Yeezy line. Revenue for the three months ending Dec. 31 fell 8% to 4.8 billion ($5.2 billion based on current exchange rates) with a net loss of 359 million ($393 million).

North America, which is the second biggest market for the brand, was the worst performer with revenue down 25% to $1.3 billion. Business in Europe (-10%), Asia-Pacific (-6%) and Latin America (-12%) all declined. The lone bright spot was Greater China, up 29% to $730 million.

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For the full year, revenue fell 5% to $23.3 billion with a net loss of $82 million. It was the company’s first annual loss since 1992.

“Although by far not good enough, 2023 ended better than what I had expected at the beginning of the year,” Bjorn Gulden, Adidas CEO, said in a statement. “We still have a lot of work to do, but I feel very confident we are on the right track. We will bring Adidas back again.”

In October 2022, Adidas cut ties with Yeezy’s designer Ye, the rapper previously known as Kanye West, over his anti-Semitic remarks. Adidas still had $1.3 billion worth of existing Yeezy shoes to unload and decided to donate part of the profits to charity. The company sold roughly $820 million worth of Yeezy product during the second and third quarters of 2023—it did not sell anything in the fourth quarter—and expects to sell the remaining $270 million in 2024.

Yeezy revenue was more than $1.3 billion in 2022.

In the financial release, the company highlighted its disciplined “go-to-market and buying process” for helping reduce inventory levels by $1.6 billion during the year. Adidas says its inventory levels are now “healthy” in every market, with the exception of the U.S.

Adidas expects its currency-neutral revenue to increase at a “mid-single-digit” rate in 2024, with bigger gains in the second half of the year, as well as growth in all markets outside of North America. Operating profit is projected at $545 million, a jump from their profit of $292 million in 2023.

Adidas’ stock price is up 40% over the past year, as investors have bought into the turnaround plan led by Gulden, who took over as CEO in January 2023.

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