At the end of October, the German sports firm Adidas announced the end of its commercial relations with the Kanye West rapper, who had a clothing and tennis line known as Yeezy for anti-Semitic comments.
Three weeks after the determination, Adidas reported on Wednesday that it cut the estimate of split your earnings for the remainder of the year as a result of the line dedicated to West.
Forbes financial analysts indicated that cut their 2023 revenue forecast for Adidas in about $398,000,000 due to the disappearance of Yeezy, a substantial economic impact for the brand according to experts.
After what happened with the singer, the company projected a net income of $251,000,000 below the objective goal that exceeds $500,000,000 established on October 20 of this year.
Gross margin is now expected to be around 47% for the year. Despite the hiccups, Adidas reported a 4% year-over-year increase in sales on a currency-neutral basis in the third quarter.
This trend impacts double-digit growth in e-commerce in North America and Latin Americamarkets that are key and fundamental for the German company.
Gross margin fell one percentage point to 49.1% due to “higher supply chain costs, higher discounts and an unfavorable market mix,” the company said.
In a statement, Adidas CFO Harm Ohlmeyer indicated that the market environment changed in early September, as that consumer demand in western markets slowed and traffic trends in China deteriorated further.
“As a result, we saw a significant inventory buildup across the industry, leading to increased promotional activity throughout the rest of the year, which will weigh increasingly on our earnings,” Ohlmeyer said.