Adidas to slash dividend after Kanye West split

By Alexander Hübner

BERLIN (Reuters) -Adidas will slash its 2022 dividend, it said Wednesday, warning a split with rapper and fashion designer Kanye West could push it to its first annual loss in three decades this year.

The company will recommend a dividend of 0.70 euros ($0.7374) per share at a May 11 annual general meeting, it said. The 2021 dividend was 3.30 euros a share.

Adidas is still dealing with the fallout from ending its partnership with West, which yielded the lucrative Yeezy sneaker line.

Chief Executive Bjorn Gulden, who took the reins on Jan. 1, pledged to rebuild the bruised brand.

The company needs to refocus on its core business and faces a “transition” year before returning to profit in 2024, he said.

Shares in Adidas were down 3.1% in early trading.

Adidas said it is still deciding what to do with its stock of unsold Yeezy footwear. The split cost it 600 million euros ($632 million) in sales in the fourth quarter of 2022, and Yeezy shoes would have brought in an estimated $1.2 billion this year.

Currency-neutral revenue declined by 1% in the fourth quarter, taking into account a 600-million-euro loss after it stopped selling Yeezy shoes.

For 2023, the company forecast underlying operating profit at roughly break-even level when taking into account the sales loss should it fail to sell existing Yeezy stock.

The end of COVID-19 lockdowns in China is expected to drive sales up across the major retail brands for whom China is a key market, but for Adidas that boost will likely be wiped out by the impact of the Yeezy split, making it hard for it to compete against rivals Nike and Puma.

Analysts at Wedbush who track new sneaker product launches said Nike is likely to take market share from Adidas in the absence of new Yeezy designs.

($1 = 0.9493 euros)

(Reporting by Alexander Huebner; Additional reporting and writing by Friederike Heine and Helen Reid, Editing by Paul Carrel and Matt Scuffham)