German Shoe and sportswear maker Adidas on Wednesday lowered its earnings forecast for the full year to account for losses from ending its partnership with rapper Ye, formerly known as Kanye West, in response to the artist’s anti-Semitic remarks.
Adidas cut its sales outlook for the year as part of its third-quarter earnings statement, to a low single digit increase from a mid-single digit increase, and net profit from continuing operations to 250 million euros ($252 million) instead of 500 million euros.
The company, based in Herzogenaurach, Germany, had previously said ending the partnership with Ye’s Yeezy brand would cost it 250 million euros. The Yeezy brand accounted for up to 15 percent of Adidas’ net income, according to Morningstar analyst David Swartz. Adidas has ended production of all Yeezy products and ceased royalty payments.
For weeks, Ye made antisemitic comments in interviews and social media. He was suspended from both Twitter and Instagram.
The company had already cut its year forecasts on October 20, five days before it announced it was ending the relationship with Yeezy. The earlier outlook revision cited slowing activity in China, where severe restrictions aimed at limiting the spread of COVID-19 have held back the economy, and clearance of elevated inventory levels.
Net income for the third quarter from continuing operations was 66 million euros, down from 479 million euros in the same quarter a year ago. The decrease largely reflected 300 million in one-time costs, most of it from winding down the company’s business in Russia.
Germany based shoe and sportswear company Adidas slashes its sales forecast for the year after it ended partnership with Ye, formerly known as Kanye West after rapper's antisemitic remarks on social media.
