Adidas has issued a warning over the potential negative effects on its bottom line of terminating its collaboration with musician and fashion designer Kanye West in November.
The company could lose hundreds of millions of dollars this year if its stock of Yeezy sneakers is not sold, according to the new leader of the company.
Ye West, who works for the sportswear firm, was fired after he made anti-Semitic remarks on social media.
The corporation has issued a profit warning four times since July with this news.
“The numbers speak for themselves. We are currently not performing the way we should,” the company’s chief executive Bjørn Gulden, said in a statement.
Adidas said it was still deciding whether to scrap its remaining Yeezy stock and would take a €500m ($536m; £443m) hit to its profits if it is all written off.
On top of that the company expects a shake-up of the business to cost another €200m.
That could mean it is pushed to an operating loss this year totalling €700m, the company warned.
Adidas is expected to return to profit in 2024, it added.
At the same time the company revealed that its operating profit for last year had fallen to €669m, two thirds lower than in 2021.
US-traded shares in Adidas fell by almost 9% after the announcement.
In October, the company announced that it was ending the highly profitable partnership with West after he caused an outcry over his anti-Semitic comments.
While the decision to end its partnership with Yeezy had a major negative impact on Adidas, it has also faced other challenges over the last year.
Mr Gulden joined Adidas at the start of this year from rival Puma after his predecessor was ousted in the wake of a series of profit warnings.
In March, the company announced that it would close its shops in Russia and suspend its online store there as it joined a raft of global brands that pulled out of the country in the wake of the invasion of Ukraine.
The firm’s business in China was also impacted by Beijing’s strict zero Covid measures that saw major cities across the country put into lockdown.
Source: BBC