In This Article:
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Split with Kanye West weighs on 2022 results
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Dividend set to fall to 0.7 euro/share from 3.3 euros/share
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CEO promises turnaround after predicted 2023 loss
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Adidas still deciding whether to repurpose Yeezy stock
(Adds new CEO comments, updates share price)
By Alexander Hübner
HERZOGENAURACH, Germany, March 8 (Reuters) - Adidas will slash its 2022 dividend, the sporstwear maker said on Wednesday, warning a split with rapper and fashion designer Ye could push it to its first annual loss in three decades this year.
Chief Executive Bjorn Gulden, who will speak to investors later in the day for the first time since taking the reins on Jan. 1, pledged to rebuild the bruised brand after dealing with the fallout from ending Adidas' partnership with Ye, which yielded the lucrative Yeezy sneaker line.
Adidas has not said how much the Yeezy brand has made since its first deal with Ye, formerly known as Kanye West, at the end of 2013, but analysts estimate it accounted for as much as 7% of total sales in its best years.
The company needs to refocus on its core business and faces a "transition" year before returning to profit in 2024, and will return to its sports-based roots, Gulden said.
"You will see us investing in more sports... because that is the DNA of this company," he told reporters.
The company will recommend a dividend of 0.70 euros ($0.7374) per share, down from 3.30 euros a share in 2021, at a May 11 annual general meeting, it said.
Adidas shares were down 1.4% by 1120 GMT. They have, however outperformed rivals Puma and Nike since the start of this year, in a sign that investors back Gulden.
The company cut ties with Ye in October following a series of antisemitic comments he made on social media and in interviews which also prompted Twitter and Instagram to restrict his accounts on their platforms.
Gulden said Adidas is still deciding what to do with its stock of unsold Yeezy footwear. Burning the shoes poses a sustainability issue, he said, while giving them away to charity is complicated due to their resale value, which has surged since the split.
A pair of Yeezy 350 "Zebra" shoes is now selling for between $340 and $360, compared to around $260 four months ago, according to John Mocadlo, CEO of U.S. sneaker reseller Impossible Kicks.
One option could be for Adidas to donate proceeds from the sale of repurposed Yeezy stock to charity, Gulden said.
The split cost Adidas 600 million euros ($632 million) in sales in the fourth quarter of 2022, and Yeezy shoes would have brought in an estimated $1.2 billion in revenue this year.