The German clothing brand Adidas said on Wednesday that it planned to cut its 2022 dividend to 0.70 euros which is equivalent to $0.7374 per share, owing to the losses from its partnership break with the popular American rapper, Kanye West.
According to Reuters, Adidas said its executive and supervisory boards plan to recommend the dividend drop from 3.30 euros in 2021 to 0.70 euros at its annual general meeting on May 11.
Following the split of the company with the rapper, which accounts for a 600-million-euro loss, Adidas said that currency-neutral revenue had dropped by 1% in the fourth quarter of 2022.
While accounting for the sales loss if it is unable to sell its current supply of Yeezy stock, the company forecasted underlying operating profit for 2023 at about a break-even level.
The CEO of Adidas, Bjorn Gulden said, “2023 will be 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.”
Based on Reuter’s outlook, the main retail companies for which China is a vital market, the termination of COVID-19 lockdowns in China is anticipated to increase sales, but for Adidas, this boost will likely be canceled out by the effect of Yeezy split.
This makes it even difficult for the company to compete with brands like Nike and Puma in the year 2023.
It was also reported that Wedbush analysts who follow the launch of new sneakers predicted that, in the absence of fresh Yeezy styles, Nike would overtake Adidas in market share.
