Adidas books profit as it sells off rapper Kanye West inventory

Adidas said Thursday it booked a profit in the second quarter, showing tentative signs of recovery as it sells off its huge inventory of rapper Kanye West's Yeezy merchandise. The German sportswear giant reported a net profit of 84 million euros ($92 million) from April to June, following two consecutive quarters of losses.

The German sportswear giant reported a net profit of 84 million euros ($92 million) from April to June, following two consecutive quarters of losses. But this was still substantially lower than in the same period a year earlier.

Adidas has endured a period of chaos since October last year when it ended its lucrative tie-up with rapper West - now known formally as Ye - after he made a series of antisemitic outbursts. The group ended production of the highly successful Yeezy line designed with West, and was saddled with a vast inventory of merchandise.

Adidas also faced problems in China, long one of its key markets. But there were improvements on both these fronts in the second quarter. Adidas started selling part of the Yeezy inventory in May, with the proceeds to be donated to NGOs.

"The sale of the first part of the Yeezy inventory did of course help both our top and bottom line in the quarter," said CEO Bjorn Gulden in a statement. Adidas is launching a second sell-off of Yeezy stock this month. 

The company already announced last month that the sale of the merchandise, along with business going a bit better than expected, would help it post a lower annual loss than earlier pencilled in. It now expects to end the year with an operating loss of 450 million euros, compared to its earlier forecast of a 700-million-euro loss.

In China, where sales had plummeted by a third in 2022 partly due to continued measures against the coronavirus, business showed signs of picking up, with revenues up 16 percent.