The German sports giant Adidas lost money in 2023, something that has not happened in the last three decades, according to the accounts it presented this Wednesday. The brand is trying to recover from the loss caused by the breakup with the rapper and designer Ye -Kanye West- in October 2022, which caused the suspension of the sale of the Yeezy footwear line, highly profitable for the group. Thus, with a drop in sales of that line, in the last year it lost 58 million euros, the first closing in the red since 1992. It is something that it also attributes to “extraordinarily high taxes.”
The CEO, Bjorn Gulden, is redoubling his efforts to try to leave the slump behind. “Although it was not good enough, 2023 ended better than I expected at the beginning of the year,” he confessed this Tuesday. The company calls the year a “transition.”
In Gulden’s first year in office, he resumed sales of the Yeezys to liquidate the remaining stock after aborting their marketing. In 2023 he sold products from this line for 750 million euros, 500 million less than the previous year. Thus, net sales for the entire group fell last year, affected by the cancellation of the partnership with the rapper and designer. Since he no longer sells his line, one of the main ones, income goes down. They did so by 5%, to 21,427 million euros.
To leave the problems behind, it seeks to promote popular products such as Samba and Gazelle sneakers, which have become fashionable. The strategy works because footwear sales grew by 4%, while clothing sales fell by 6%.
Adidas believes it can steal market share from rivals such as Nike and Puma, even with declining consumer appetite. Now in his second year at the helm, Gulden is trying to orchestrate another era of rapid growth to close the gap on industry leader Nike. Precisely in North America, the birthplace of Nike, sales fell the most, 16%, “particularly affected by the negative impact of Yeezy.” In China, sales rose by 8%, in the EMEA region – Europe, the Middle East and Africa – they remained stable, and in Latin America they rose by 22%.
For what’s to come, Adidas reiterated its forward-looking conservative outlook in January, disappointing analysts and sending its shares tumbling at the time. This year it expects sales to fall in North America, its second-largest market, and says excess stock remains high. In China, it expects a stronger recovery, with sales growing at a double-digit rate after an increase of 8% in 2023. Something similar would happen in Latin America and in the case of Europe, it expects a sales rebound in the high range of a figure
“The popularity of its brands is increasing, which can be seen in the fact that it now has to sell fewer products at a discount,” says Thomas Joekel, an analyst at Union Investment. Despite the losses, he proposes a dividend payment of 0.70 euros per share.
