Adidas reported its first loss in over three decades due to the fallout from the end of its collaboration with Kanye West

Adidas posted its first loss in over thirty years on Wednesday, attributed to fallout from ending its collaboration with Kanye West. However, the company remains optimistic about its prospects.

The German sportswear giant terminated its contract with the US rapper, now known as Ye, in late 2022, following a series of anti-Semitic social media posts. This move severed a crucial revenue stream derived from their blockbuster Yeezy trainers line and left Adidas with a surplus of unsold footwear.

In 2023, Adidas reported a loss of 75 million euros ($82 million), a significant downturn from the previous year's profit of 612 million euros. This marked the company's first net loss since 1992.

CEO Bjorn Gulden, appointed after the dissolution of the West partnership, remains positive about the future. Despite acknowledging the challenges ahead, Gulden expressed confidence in the company's ability to rebound, emphasizing the foundation laid for future success.

Although revenues dipped by five percent to 21.4 billion euros, the impact was most keenly felt in the United States due to discontinued sales of Yeezy trainers.

Adidas has been gradually selling off its Yeezy inventory, with two sales in 2023 generating 750 million euros, though falling short of the 1.2 billion euros in revenue from 2022.

The company anticipates selling its remaining Yeezy shoes this year at cost, yielding around 250 million euros in revenue.

While North American sales are expected to continue declining, there has been a robust uptick in China, buoyed by eased COVID-19 restrictions.

Adidas is banking on the upcoming European football championships and the Olympics in Paris to drive additional sales of jerseys and related merchandise.

Despite a forecasted increase in sales for 2024 and an operating profit expected to double from 2023 to around 500 million euros, Adidas's outlook fell short of analysts' expectations, leading to some disappointment.

Nonetheless, Adidas shares saw a four percent increase in late afternoon trading.

Deutsche Bank characterized 2024 as another transition year for the company, emphasizing the focus on future growth strategies.