Adidas cuts profit forecast after ending Yeezy partnership

New York: Adidas slashed its profit forecast for the third time since July after ending its partnership with rapper Ye and discontinuing the lucrative Yeezy line of sneakers.

The German company now expects currency-neutral revenue for the year to grow at a low-single-digit rate, down from a previous target of mid-single-digits. It also trimmed its forecast for this year’s operating margin to 2.5 per cent from 4 per cent, according to a statement.

The lower targets reflect the company’s decision last month to end its collaboration with the rapper and designer, formerly known as Kanye West, following a string of offensive and antisemitic remarks. The Yeezy line accounted for about half of Adidas’s total profits, according to analysts.

The sneaker-maker announced Tuesday that Bjorn Gulden, the former CEO of rival Puma SE, will take over as CEO in January. The company is seeking to revive its fortunes amid a panoply of challenges, including in China, once Adidas’s biggest bright spot, where sales are down by about a third through September amid consumer boycotts of Western brands.

Demand in Western markets has also began to slow as consumers feel the impact of surging inflation and concerns grow about a potential recession. That’s creating a situation where unsold goods are piling up.

Adidas is hoping the World Cup soccer tournament, which starts this month, will provide a boost. Traditionally, the event has led to a surge in sales of jerseys and soccer gear - though the unusual timing of this year’s event taking place in the Northern hemisphere’s late autumn has so far limited the excitement.