Adidas shares slumped as much as 12.6% on Friday after the sportswear maker warned it could plunge to a loss this year for the first time in three decades, in the latest downgrade triggered by its split from Kanye West.
Inventory of the rapper and fashion designer’s Yeezy brand, with price tags for sneakers and apparel of up to $700 a pair, could be written off entirely, resulting in a 700 million euro ($749 million) loss this year, the company said on Thursday.
Just by not selling the stock, revenues would take a 1.2 billion euro hit in 2023, while operating profit would fall by about 500 million euros to around break-even, the rival to Nike added.
“The numbers speak for themselves. We are currently not performing the way we should,” said CEO Bjorn Gulden, who joined Adidas on Jan. 1 after switching from rival Puma and has promised a “year of transition” to make the sportswear giant profitable again.
At 1200 GMT, Adidas shares were down 12.3% at 137 euros.
In its fourth profit warning in less than six months, it forecast a high single-digit percentage decline in sales this year. Analysts had on average expected a 4% rise in 2023 revenue on a currency-neutral basis and operating profit of 1.02 billion euros, according to figures on Adidas’ website.
Baader Helvea described the new guidance as “horrible” and very disappointing.
The news came as Adidas missed its own forecasts with a rise of just 1% in 2022 revenue in currency-neutral terms.
Jefferies cut its recommendation on Adidas stock to “hold” from “buy”, citing “challenges in articulating the mid-term profit delivery”.
Adidas had lowered its 2022 forecasts in October to mid-single digit percentage revenue growth and a 4% operating margin in light of weaker demand in China and Western markets and one-off expenses related to exiting Russia.
But Thursday’s results showed the company had fared worse than it expected, yielding an operating margin of 3%.
It will report full 2022 results on March 8.
