The tough times are continuing in the athletic footwear and apparel market as industry giant Adidas reported Wednesday its first annual loss in more than three decades.
The German company said it posted a net loss of $82 million in 2023, reversing a $670 million gain in ’22 and representing the first such full-year loss since 1992. The figure arrived as Adidas saw its sales decline 5% to $23.45 billion, and operating profit plunged 60% to $293 million, continuing a slump seen across the entire category. Key competitors such as Nike continue to be affected by many of the same trends, and that company is in the midst of cutting $2 billion in costs, in part through layoffs.
The outlook for Adidas for 2024 also suggests a mixed road ahead. While Adidas is projecting “significant” growth in most of its market segments, it is also expecting a mid-single-digit percentage decline in the key North American market, extending a 16% drop there last year.
Adidas CEO Bjørn Gulden sought to put a brave face on the results, and his primary talking points to analysts and investors tracked along an it-could-have-been-worse theme.
“Although by far not good enough, 2023 ended better than what I had expected at the beginning of the year,” he said. “With the exception of the U.S., we now have healthy inventories everywhere.”
About Yeezy
Adidas has now sold most of the $1.3 billion worth of leftover stock from its aborted partnership with controversial rapper Ye, formerly known as Kanye West. After generating $374 million in sales during the third quarter from Yeezy shoe closeouts, the company paused those efforts in the fourth quarter. Sales resumed last year, with the remaining shoes to be sold at cost. But with only about $328 million in stock left, the Yeezy line is expected to have much less of a financial impact than before.
“We will bring Adidas back again,” Gulden said. “Give us some time, and we will again say, ‘We got this!’”
