ADIDAS slashed its dividend and offered no concrete plans to dispose of US$1.3 billion worth of Yeezy gear, as new chief executive Bjorn Gulden tries to turn around the crisis-beset German sports brand.

The company’s sales in the Asia-Pacific region plunged 31 per cent in 2022, in large part because it failed to overcome the country’s widespread boycotts of Western brands. It said on Wednesday (Mar 8) that it would recommend slashing its annual dividend for 2022 to 70 euro cents from 3.30 euros in 2021.

Catering products to local markets has become a particularly urgent problem in China, which was once Adidas’ growth engine. The end of Covid lockdowns in China is expected to drive up sales for major retail brands, but for Adidas, that boost will likely be wiped out by the impact of its split with Yeezy collaborator Ye. This will make it hard for the company to compete against rivals such as Nike and Puma.

The company cut ties with Ye – formerly known as Kanye West – last October, after he unleashed a string of hateful and anti-Semitic rhetoric. The split cost it 600 million euros (S$856.4 million) in sales in the fourth quarter of 2022. Shoes from the collaboration would have brought in an estimated US$1.2 billion this year.

If Adidas writes off the unsold Yeezy products, its operating profit would fall by 500 million euros, leading it to its first annual loss in more than three decades. Older designs from the collaboration continue to fetch high prices on websites such as eBay.

Gulden said that he was looking to pivot beyond the Yeezy fiasco and rebuild brand heat, with a strategy that “balances global direction with local needs, that is fast and agile”. The company added that the chief executive was aiming to return it to profitable growth in 2024 by reducing inventories and cutting discounts. This affirmed its gloomy outlook for 2023. BLOOMBERG, REUTERS

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