Adidas plans to sell its remaining Yeezy stock at cost price as full-year results benefited from a “better-than-expected” performance in the last quarter and the sale of Yeezy products.
In its preliminary results for 2023, the global sportswear giant said it generated an operating profit of €268m (£228.7m) as compared with the €669m (£572m) profits the business reported in 2022.
Adidas was expecting an operating loss of €100m (£85.3m) as outlined in its last profit guidance.
The global sportswear giant attributed its performance to “better-than-expected” operational business in the last quarter and its “decision not to write off the vast majority of its existing Yeezy inventory.”
The company said it plans to sell its remaining Yeezy inventory “at least at cost price” in 2024.
The collaboration between the US rapper and enterpreneur and the German sportswear brand was dissolved in 2022 in the wake of controversial anti-semitic remarks made by West.
Total sales at the brand remained flat compared with the previous year on a currency-neutral basis, but fell 5% to €21.4bn (£18.3bn) on a like-for-like basis.
Adidas said it suffered “the negative translation impact of more than €1bn (£853.5m) from unfavourable currency movements, which are expected to remain a drag on the company’s top-line development in 2024.”
Chief executive Bjørn Gulden said: “We do, of course, know that our financial performance is not good. But we are on the way of making Adidas a good company again. As we said from the beginning, we just need the time to solidly build it up again. I feel that the attitude and agility in our teams are back and that we are showing the old Adidas DNA again.
“For 2024, we expect sales to start flattish, but to then improve every quarter. We expect the underlying Adidas business (excluding Yeezy) to grow in high-single-digits for the full year and to be up at least 10% in H2.
“Despite no assumed profit contribution from Yeezy, the strong unfavourable currency effects, the ongoing challenges in North America, our continued investment in both marketing and sales, and a world full of uncertainties, we expect an operating profit of around €500m (£426.6m) in 2024.”
Gulden concluded: “This year is the next building block needed to bring Adidas back to being a company with double-digit growth and 10% operating margin.”