Adidas has recently observed a significant decline in stock prices following the fallout with hip-hop artist and entrepreneur Kanye West, popularly known as ‘Ye.’

The company witnessed a sharp drop in its shares after unveiling conservative projections for the year 2024, leaving both investors and analysts disappointed. 

This downturn adds to the ongoing challenges that Adidas has been grappling with since cutting ties with Kanye West in 2022, a decision that has impacted the financial performance of the global sportswear company.

Although Adidas’ preliminary full-year earnings report for 2023 showcased a robust net sales figure of $23.1 billion, as reported by Forbes, the conservative projections for 2024 fell below market expectations. 

Adidas’ fourth quarter earnings were helped by a decision not to write-off the stock Kanye West’s Yeezy product line and sell the sneakers at cost. The German sportswear giant also forecast a nearly double operating profit of over $542 million this year https://t.co/atRmPFpnIk pic.twitter.com/R2gDOXiItJ

— Reuters (@Reuters) February 1, 2024

Analysts had predicted an operating profit of around USD 1.37 billion (€1.27 billion), but the sportswear company projected only USD 540 million (€500 million) for the upcoming year. This stark difference in estimates led to a nearly 9% drop in Adidas’ share price after European markets opened on Thursday, settling at $178.5 (165.44)—a 6% decline from the previous day.

Reports suggest that the company attributes the conservative forecast to currency fluctuations in key markets, signaling potential challenges ahead. This announcement has fueled concerns among investors, contributing to the ongoing volatility in Adidas’ stock value.

In an attempt to mitigate the impact of the share price decline, Adidas has devised a strategic plan to sell its remaining inventory of Yeezy footwear. The remaining Yeezys, valued at approximately USD 324 million (€300 million), will be offered at cost rather than being entirely written off.

The Germany-based company anticipates generating around $270 million from this initiative, providing a financial buffer against the setbacks experienced due to the fallout with Kanye West. This move not only allows Adidas to recover some potential losses but also presents an opportunity for consumers to acquire Yeezy footwear at a discounted rate.