Adidas cuts earnings outlook after Yeezy split

FRANKFURT, Germany — Footwear and sportswear maker Adidas on Wednesday cut its full-year profit forecast to reflect losses from ends his partnership with rapper Ye, formerly known as Kanye West, in response to the artist’s anti-Semitic remarks.

Adidas cut its sales forecast for the year as part of its third-quarter earnings report 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, previously said that ending its partnership with Ye’s Yeezy brand would cost it 250 million euros. The Yeezy brand accounts for up to 15 percent of Adidas’ net income, according to Morningstar analyst David Swartz. Adidas has discontinued all Yeezy products and suspended royalty payments.

For weeks, Ye does anti-Semitic comments in interviews and social media, including a post on Twitter earlier this month that he would soon move on to “death con 3 on JEWRY PEOPLE,” an apparent reference to the US defense readiness scale known as DEFCON. He was suspended from both Twitter and Instagram.

Read more: Adidas’ dark history is in the spotlight as it ends its deal with Kanye West over his anti-Semitic comments

The company had already cut its full-year guidance on Oct. 20, five days before announcing it was ending its relationship with Yeezy. The earlier revision to the outlook cited a slowdown in activity in China, where strict restrictions aimed at limiting the spread of COVID-19 have held back the economy and the release of elevated inventory levels.

Third-quarter net income from continuing operations was €66 million, down from €479 million in the same quarter a year ago. The decrease largely reflected 300 million in one-time costs, most of which from winding down the company’s business in Russia.

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