Adidas rose 6% after cutting its 2023 loss forecast thanks to strong Yeezy sales

A Fashion Week guest is seen wearing red adidas yeezy shoes, outside Paul and Joe during London Fashion Week September 2022 on September 17, 2022 in London.

Jeremy Mueller / Contributor / Getty Images

German sportswear giant Adidas On Monday, it said it expects a much smaller operating loss for the year after it reported better-than-expected early sales for its Yeezy inventory, which is offloaded after cutting ties with collection creator Ye.

Shares of Adidas rose 6.3% at 10:22 a.m. GMT Tuesday after the company said the potential to write off remaining inventory was now 400 million euros ($442.5 million), down from 500 million euros, as it cut its forecast for 2023 operating losses to 450 million euros from 700 million euros.

The company also reported slightly outperformance in its core Adidas business and said it still expects core operating earnings, barring individual cases related to Yeezy and the broader ongoing strategic review, to roughly break even for the year.

“If successful, potential future Yeezy discounts will further improve the company’s results,” Adidas said in a statement, referring to other versions of existing inventory.

Adidas ended its partnership with musician Ye, formerly known as Kanye West, in October 2022 after he made a series of offensive and antisemitic comments. After several weeks of online criticism, Adidas called Ye’s comments “unacceptable, hateful, and dangerous” and said it would end production of Yeezy branded products, which include shoes and apparel, and stop all payments to Ye and his companies.

That left the question of what the company would do with its existing Yeezy shares.

In May, Adidas announced that it would sell the inventory and donate a “significant amount” of the proceeds to groups including the Anti-Defamation League and the Philonise and Keeta Floyd Institute for Social Change.

Adidas signed a deal to manufacture and distribute items from its Yeezy clothing line in 2016, with the brand growing to bring in nearly $2 billion annually for the company, 10% of its revenue, according to Morningstar analyst David Swartz.

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