German sportswear giant Adidas slashed its earnings forecast on Wednesday, saying the end of its partnership with rapper Kanye West would cut this year’s net income in half.
The group now expects a net profit from continuing operations of 250 million euros ($252 million) for 2022, down from a 500-million-euro estimate last month, which was itself a downgrade from previous forecasts in part because of slowing sales in China.
The group’s full-year revenues are forecast to grow at a “low-single-digit” rate, Adidas said in a statement, compared with the mid-single-digit rate it had still expected last month.
Adidas blamed the gloomier outlook on the “high seasonality” of the successful “Yeezy” line developed with West, in a nod to the upcoming Christmas season that usually provides a sales boost.
Adidas cut ties with West — known formally as Ye — in late October after the artist made a series of anti-Semitic comments.
The group said net income from continuing operations reached 66 million euros in the third quarter, down from 479 million over the July-September period last year.
Adidas on Tuesday named Bjorn Gulden from rival outfitter Puma as its new chief executive, tasked with turning the page on months of turbulence.
As well as the end of its Yeezy partnership, Adidas has been struggling with China’s strict Covid-19 measures, which have hampered its activity in what has become a key market.
Demand in Western markets has also slowed, Adidas said, as consumers in many countries grapple with high inflation and a cost-of-living squeeze.
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