Adidas posted flat sales in the first quarter of 2023, as the global sportswear giant admitted the loss of the Yeezy brand is “of course hurting us”.

Adidas reported gross profit of €2.3bn (£2bn), down 10.8% from €2.6bn (£2.2bn) in the first quarter of 2022. Operating profits plunged 86.2% to €60m (£52.5m) from €437m (£382m) the previous year.

Sales remained “flattish” but “a little better than expected” performance as the quarter ended with €5.3bn (£4.6bn) in net sales, a 0.5% decline from the same time last year. The global sportswear giant said the discontinuation of the Yeezy business continues to weigh it down representing a drag of €400m (£350m) year on year, mainly across North America, Greater China and EMEA.

Gross margins declined 44.8%, dragged down by “inventory allowances, the adverse Yeezy impact and negative currency developments” and an ”increase in supply chain costs as well as higher discounting in the marketplace”.

Adidas chief executive Bjørn Gulden said: “Adidas has all the ingredients to be the best sports brand in the world, to grow strongly and to be a good profitable company. We just need some time; 2023 will be a bumpy year with disappointing numbers, where maximizing our short-term financial results is not our goal. It is a transition year to build a strong base for a better 2024 and a good 2025 and beyond.”