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- Adidas said Wednesday it will cut its 2022 dividend by around 80% after ending its Yeezy partnership.
- The sportswear giant expects to take a $1.3 billion earnings hit after severing ties with Kanye West.
- Adidas dropped the Yeezy sneaker line after rapper West, known as Ye, made antisemitic comments.
Adidas slashed its 2022 dividend by 79% Wednesday, as the end of the German sportswear giant's partnership with "Yeezy" designer Ye looks set to hammer its profits.
In a recap of its performance last year, the European-listed company said it will pay its shareholders 70 euro cents ($0.74) a share at its general meeting on May 11, down from 3.30 euros ($3.48) in 2021.
In October, Adidas terminated its partnership with Ye, the rapper formerly known as Kanye West, after he repeatedly made antisemitic comments on Twitter and in an unaired interview with Fox News presenter Tucker Carlson.
It warned in February that the end of the partnership's Yeezy sneaker line would reduce its earnings by around 1.2 billion euros ($1.3 billion). Analysts from S&P Global Ratings estimate the line accounted for 7% of the company's total sales last year.
The sportswear giant added Wednesday that it will have to write off around 500 billion euros ($530 billion) worth of Yeezy sneakers if it can't find buyers for the inventory it currently holds. It might be forced into "literally burning the shoes," industry experts told the Washington Post.
Bjørn Gulden, who took over as Adidas's CEO in January, promised to rebuild the company's battered reputation as it deals with the fallout from the end of its Yeezy partnership.
"2023 will be a transition year to build the base for 2024 and 2025," he said. "We need to reduce inventories and lower discounts. We can then start to build a profitable business again in 2024."
"We will bring it back to be the best sports brand in the world once again," Gulden added.
Adidas's main listing is on Frankfurt's DAX 40 index, but US-based investors can buy its American depositary receipts if they want to own a stake.
The German-listed shares fell 2.28% to 141 euros in morning trading Wednesday. The stock is up about 40% since Adidas cut ties with Ye on October 25.
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