Adidas AG slashed its profit forecast for the third time since July after ending its partnership with rapper Ye and discontinuing the lucrative Yeezy line of sneakers.
The German company now expects currency-neutral revenue for this year to grow at a low-single-digit percentage rate, down from a previous target of mid-single-digits.
It also trimmed its forecast for this year’s operating margin to 2.5 percent from 4 percent, the company said in a statement.
Photo: AP
Adidas also expects net income from continuing operations of about 250 million euros (US$251.8 million) this year, down from a target of about 500 million euros set in a statement on Oct. 20.
The lower targets reflect the company’s decision last month to end its collaboration with the rapper and designer, formerly known as Kanye West, following a string of offensive and anti-Semitic remarks.
The Yeezy line accounted for about half of Adidas’ total profits, analysts said.
Photo: AFP
Adidas yesterday reported third-quarter net income from continuing operations of 66 million euros, revising down its preliminary figure by almost two-thirds following the end of the partnership.
The company on Tuesday announced that Bjorn Gulden, former chief executive officer of rival Puma SE, would take over as CEO next year.
CHINA CHALLENGE
The company is seeking to revive its fortunes amid a panoply of challenges, including in China, once Adidas’s biggest bright spot, where sales were down by about one-third in the first nine months of this year amid consumer boycotts of Western brands.
Demand in Western markets has also begun to slow, as consumers feel the impact of surging inflation and concerns grow about a potential recession. That is creating a situation where unsold goods are piling up.
Adidas is hoping the World Cup soccer tournament, which starts this month, will provide a boost.
Traditionally, the event has led to a surge in sales of jerseys and soccer gear — although the unusual timing of this year’s event taking place in the northern hemisphere’s late autumn has so far limited the excitement.
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