Adidas Bails From Yeezy. Why that packs a punch.
Adidas
The German company has too much inventory and China’s sales fall. That was slashed guidance, and earnings were half of Wall Street expectations. Shares are down more than 60% this year. Last week, Adidas abruptly said it was suspending production and distribution of rapper Kanye West’s Yeezy clothing line — primarily sneakers — after he made anti-Semitic comments. Immediate success: 250 million euros ($246.4 million).
It got worse, said Wedbush analyst Tom Nikic, who saw another €350 million hit to net income in the ’23 financial year. Adidas doesn’t disclose Yeezy’s revenues, but Nikic estimates them as high as 9% of the company’s $23 billion in total revenue. He has downgraded his stock rating to Neutral from Outperform and his target to €102 from €130.