Adidas AG has yet to decide on what to do with its mountain of unsold Yeezy sneakers, but new CEO Bjorn Gulden said its turnaround is nonetheless off to a good start.
The German sneaker maker in a statement yesterday said that it still expects to post losses of 700 million euros (US$772.1 million) this year if it cannot sell the Yeezy products, although it is making headway in improving operations and relations with suppliers and retailers.
Adidas reported sales of 5.3 billion euros in the first quarter of this year, about in line with a year earlier and ahead of analysts’ estimates.
Photo: AP
Business was stronger in Latin America and parts of Asia, while the company is ramping up production of the classic Samba, Gazelle and Campus sneakers to serve high demand.
Adidas shares rose as much as 6 percent in early German trading, the biggest intraday gain in three months.
This year would be bumpy with disappointing numbers, but Adidas is not worried about maximizing its short-term financial results, Gulden said in the statement.
Instead, the company is focused on building a strong base for better results next year and beyond, he said.
That would require more markdowns to reduce the 5.7 billion euros inventory of unsold sneakers and apparel.
While that figure is down from late December last year, the stockpiles are still too high for Adidas to rebuild its brand momentum, the company said.
Adidas is still reviewing its options for the 1.2 billion euro pile of unsold Yeezy merchandise stemming from the canceled collaboration with rapper and designer Ye, formerly known as Kanye West. Adidas terminated that partnership in October last year after the performer made a string of anti-Semitic remarks.
Investors are looking for signs that Gulden, who became CEO in January, is injecting fresh optimism into the brand. In nearly a decade leading cross-town rival Puma SE, he refocused that company on sports and about tripled its sales, including posting fast growth during the COVID-19 pandemic.
Gulden is looking to renew the focus at Adidas on performance sports, and working to speed up decisionmaking, including installing himself as the company’s head of global brands.
One of his first moves has been scaling up production for hot-selling sneakers such as the Samba, which in the past few months began appearing on the feet of celebrities including Bella Hadid and Kylie Jenner.
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