Adidas has reported a significant loss in the first quarter and has recognized that its separation from the contentious American rapper, Kanye West, is having a detrimental impact on its financial performance.
Adidas and Kanye parted ways last year after the rapper wrote a tweet in which he directed his words towards the Jewish community.
The giant sportswear company condemned the rapper’s tweet directed at the Jewish community and was deemed as being antisemitic.
Adidas viewed West’s comment and actions as being unacceptable, dangerous, and promoting hate, all of which go against the company’s core values of diversity and inclusivity, mutual respect, and fairness.
The split with Kanye and the termination of their Yeezy line of products, which generated significant revenue, has had a substantial impact on the company’s financial performance.
The company’s net loss from January to March was 39 million euros ($43 million), compared to a profit of 482 million euros in the same period last year.
According to the company, the discontinuation of Yeezy hit sales by approximately 400 million euros in the quarter.
Moreover, Adidas has been experiencing a drop in sales for its lifestyle brands, further hurting its earnings.
Despite the significant loss, Adidas’s overall sales did not fare as badly as predicted, and analysts have noted early signs of an improving trend.
In response, Adidas’s share price rose 7.5 percent in the afternoon on the Frankfurt Stock Exchange.
However, the company’s CEO, Bjorn Gulden, acknowledged that the loss of Yeezy and falling revenues for its lifestyle brands are negatively impacting the company.
Gulden told reporters that the options for the huge stock of Yeezy trainers are narrowing, but finding a solution will take time as many interested parties are involved.
Although Adidas has not disclosed what it plans to do with its existing Yeezy inventory.