Adidas posts first loss in 30 years
HERZOGENAURACH: German sportswear giant Adidas posted its first loss in more than 30 years in 2023 on Wednesday as CEO Bjorn Gulden works to turn the brand around ater a messy break-up with rapper Kanye West.
Adidas has been batling to right itself ater it cut ties with West in October 2022, suspending sales of the highly profitable Yeezy sneaker line.
In Gulden’s first year in the role, he resumed sales of Yeezy sneakers to clear remaining stock while seeking to boost popular products like Samba and Gazelle shoes, and improve relationships with retailers. Shares in Adidas have staged a recovery, outperforming Nike and Puma since he took over.
“Although by far not good enough, 2023 ended beter than what I had expected at the beginning of the year,” Gulden said.
Adidas said it expects its underlying business - excluding Yeezy - to improve in 2024, with double-digit growth in the second half. Shares in Adidas were flat at the open.
It said its board would propose an unchanged dividend of 0.70 euros ($0.7650) per share on its 2023 performance despite posting a net loss of 58 million euros, its first since 1992.
Adidas is gambling that it can claw back market share from rivals even as consumers’ overall appetite for sportswear declines. Nike last month said it would cut 2 per cent of its total workforce, or more than 1,600 jobs, to reduce costs as demand weakens.
Adidas has benefited from a trend for low-rise suede“terrace”sneakerslikethesambaandgazelle, and last year ramped up production. That trend helped footwear sales grow by 8 per cent in the fourth quarter, while apparel sales fell 13 per cent.
“Things have clearly been going in the right direction at Adidas since Bjorn Gulden took over,” said Thomas Joekel, porfolio manager at Union Investment. “Brand heat is increasing, which can also be seen from the fact that fewer products now have to be sold at a discount.”