Adidas sees smaller loss this year thanks to Yeezy sales

BERLIN (Reuters) -Unexpectedly strong sales of Yeezy shoes left over from Adidas (OTC:)’ abandoned collaboration with rapper Ye should reduce the sportswear giant’s expected operating loss this year to 450 million euros ($498.56 million), the company said on Monday.

It had previously forecast a full-year operating loss of 700 million euros.

Although group revenue in the second quarter fell 5% to 5.3 billion euros, Adidas’ gross margin rose 0.6 percentage point to 50.9%, the company said on Monday in a preliminary release ahead of full second-quarter results expected on Aug. 3.

Operating profit for the second quarter was 176 million euros, down from 392 million a year earlier.

“Including the positive impact from the first Yeezy drop, the potential write-off of the remaining Yeezy inventory of now 400 million euros (previously 500 million euros) and one-off costs related to the strategic review of up to 200 million euros (unchanged), the company now expects to report an operating loss of 450 million euros in 2023,” Adidas said in a statement.

“If successful, potential future Yeezy drops would further improve the company’s results,” the company said, referring to the term used for putting new products on the market.

Adidas said the rest of its business did “slightly better than expected” in the second quarter.

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