:quality(85)//cloudfront-us-east-1.images.arcpublishing.com/infobae/Z3O6G5J7VRH6HHGBQBRFRXXUPA.webp "Adidas in trouble: they warn that it will have difficulty paying its debt after breaking the contract with Kanye West")
Sportswear company Adidas has been downgraded by ratings agency Standard & Poor’s for ending its collaboration with controversial rapper Kanye West.
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As Business Insider reports, “S&P Global Ratings lowered its long-term and short-term credit ratings for Adidas after the German sportswear giant warned that ending its partnership with Kanye West would likely hit its earnings.”
The North American rating agency, which assesses the ability of companies and governments to repay loans, lowered “its debt rating for Adidas from “A+” to “A-” and warned that this rating could fall shortly”.
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“Adidas faces a host of business challenges, including the end of its partnership with Yeezy, continued competitive pressures in the Chinese market, and shrinking consumer demand in Western countries,” S&P said in a statement.
Recall that Adidas ended its association with Ye, the rapper and fashion designer formerly known as Kanye West, in October, “after he made a series of anti-Semitic comments on Twitter and in an unaired interview with Tucker. Carlson for Fox News”. ”.
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“In an earnings notice released on February 9, the company warned that scrapping the deal would cut its profits by 1.2 billion euros ($1.3 billion) this year,” it said. recalled.
In this sense, “‘Yeezy’ sneakers were expected to represent approximately 7% of all Adidas sales in 2022”, according to the S&P press release.
In turn, Business Insider recalled, “Adidas is also struggling to outperform rival brands like Anta in China and could see total sales under pressure in the West as well if a recession slows consumer spending” due to the difficult situation. to which by several developed economies.
However, according to Business Insider, “S&P isn’t alone in sharing a bleak outlook for Adidas, as Bernstein Research warned earlier this month that the brand could see sales plummet $2 billion by 2023. , suggesting he would have been in trouble even if his partnership with Ye hadn’t imploded.
“The drop in sales goes beyond Yeezy,” Bernstein analyst Aneesha Sherman said in a note to clients.
“We are concerned that the underlying health of the business would lead to such a drastic downward trend, even after removing the impact of Yeezy,” the expert warned.
It’s worth noting that Adidas is primarily listed on Frankfurt’s DAX 40 index, but US-based investors can buy its US certificates if they want to own shares of the company.
In this sense, Business Insider pointed out that “shares are up 8% so far this year and 47% since the company severed ties with Ye on October 25”. On Tuesday, it increased by 1.34%.
According to a statement, the company “does not condone anti-Semitism or any other type of hate speech,” adding that “Ye’s recent statements and actions are unacceptable, hateful and dangerous.”
In the statement, Adidas refers to the rapper’s statements “violating company values such as diversity and inclusion, mutual respect and fairness.” After careful consideration, the company has made the decision to immediately end its association with Ye.”
The decision came after the German sportswear company received calls from celebrities and others on social media to sever its relationship with Ye. Earlier this month, the firm said it was reviewing its lucrative sneaker deal with the rapper.
Adidas is the latest company to dissociate itself from Ye, who has also been suspended from Twitter and Instagram for anti-Semitic posts that the platforms say violated their policies.
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