Kanye West Fallout Leaves Adidas Bracing For First Annual Loss In 31 Years

Adidas' decision to sever ties with rapper Kanye West could result in the first annual loss for the German sportswear company in 31 years.

"The German sportswear maker said Wednesday that it would face an operating loss of €700 million ($736 million) this year ... because of a potential €500 million ($527 million) hit related to unsold Yeezy stock, and the cost of a strategic review, " reports CNN.

The company announced on Wednesday that it would slash its dividend by 79 percent as a result.

Adidas ceased its partnership with Kanye West last October after he claimed a Jewish cabal was using its influence to undermine him. 

But the decision to part ways with the Yeezy line left Adidas with around $500 million worth of Yeezy sneakers.

The Washington Post reports that Adidas sees no solution to unload a quantity of unsellable merchandise on “a scale unseen in the fashion industry.”

Thereby the possibility of “literally burning the shoes” has emerged.

"Transition Year"Follows Kanye Move

Adidas also saw a 36 percent annual sales decline in China, its largest market. Though the decline there is partly due to the former zero-Covid policy that plagued Chinese sales.

In addition to the warehouse of shoes, the company must now find a way to replace their banner Yeezy line. Kanye's products produced around $2 billion a year in revenue.

Analysts say the Yeezy line amounted to as much as 15 percent of the net income at Adidas.

CEO Bjorn Gulden said in a statement that 2023 would be "a transition year" and "we can then start to build a profitable business again in 2024."

Transition year, no doubt.

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Bobby Burack is a writer for OutKick where he reports and analyzes the latest topics in media, culture, sports, and politics.. Burack has become a prominent voice in media and has been featured on several shows across OutKick and industry related podcasts and radio stations.