Adidas is still weighing what to do with its huge inventory.
German multinational sports brand Adidas is facing a tough time on the monetary front after the company's profit fell by 83% from 2021 to 2022, after a difficult year for the company.
According to the The Wall Street Journal, the company is reportedly dealing with a downturn in China and $6 billion in unsold inventory, which are aggravating its problems after a difficult 2022 in which it fired its CEO and dissolved its partnership with rapper Kanye West.
The loss of the Yeezy partnership is the major reason for the major reduction in profit after a disappointing performance in China and a withdrawal from Russia.
"If you lose three profit pools in one year, that leaves some marks," said Harm Ohlmeyer, Adidas' chief financial officer.
Adidas halted its tie-up with West, now known formally as Ye, in October after he made a series of anti-Semitic outbursts.
As a result, the group ended production of the highly successful Yeezy line designed together with West.
Adidas said Wednesday it was still weighing what to do with its huge inventory of Kanye West's Yeezy products after it ended its partnership with the controversial rapper.
Potentially not selling the apparel and shoes linked to West would lead to a revenue loss of 1.2 billion euros ($1.3 billion), the group said, announcing its 2022 full-year results.
Bjorn Gulden, the group's new chief executive, said the company will use 2023 as a "transition year to build the base for 2024 and 2025".
"We need to reduce inventories and lower discounts. We can then start to build a profitable business again in 2024," he said.
Next year was shaping up to be a key one for sporting apparel companies, with both the European football championships and the Olympic Games taking place.
Adidas on Wednesday also said net profit fell heavily by 83 percent to 254 million euros in 2022, confirming preliminary results released in February.
Besides its problems over the Yeezy line, it was also facing "elevated recession risks in Europe and North America, as well as uncertainty around the recovery in Greater China".
"The company's revenue development will also be impacted by the initiatives to significantly reduce high inventory levels," it added.
(With inputs from agencies)