German sportswear giant Adidas has reported a significant loss in the first quarter and acknowledged that its split from controversial US rapper Kanye West was having a negative impact on its financial performance.
The company recorded a net loss of 39 million euros (US$43 million) from January to March, compared to a profit of 482 million euros in the same period the previous year.
The end of the highly successful Yeezy line, created in collaboration with West, caused sales to drop by about 400 million euros in the quarter.
However, overall sales were not as dire as expected, and analysts saw early signs of improvement. As a result, Adidas’s share price rose by 7.5 per cent in the afternoon on the Frankfurt Stock Exchange.
Adidas had terminated its partnership with Kanye West , now known as Ye, in October after he made several anti-Semitic comments.
The loss of Yeezy, combined with declining revenues for its lifestyle brands, “is, of course, hurting us,” said new CEO Bjorn Gulden in a statement.
Gulden also discussed the challenge of dealing with the company’s vast inventory of Yeezy trainers. “The options are narrowing,” he told reporters after the results were released, but finding a solution will take time as “so many interested parties” are involved.
In February, the company had stated that it could face an operating loss of up to 700 million euros this year if it decides to write off the value of its entire existing Yeezy inventory.