Impact of Kanye West Partnership Termination and Macroeconomic Factors
- Adidas reports a 1% decline in profits to £9.45bn
- Yeezy partnership termination impacted revenue
- EBITDA fell 39% to £1.6bn
- Gross margin declined due to higher supply chain costs and increased promotional activity
- Currency-neutral revenues expected to decline at high-single-digit rate in 2023
- Adidas expects break-even underlying operating profit in 2023
- CEO Bjørn Gulden: ‘2023 will be a transition year, focusing on core business and culture’
Adidas has reported a decline in profits, with gross profit falling to £9.45bn due to the termination of its Yeezy partnership with Kanye West and other economic challenges. The company’s EBITDA dropped by 39% to £1.6bn, and operating profits decreased by 66%. Gross margin declined to 47.3% because of increased supply chain costs and promotional activity. Adidas expects a high-single-digit decline in currency-neutral revenues in 2023 due to persisting macroeconomic challenges and geopolitical tensions. The company is reviewing options for Yeezy inventory utilization, which could result in a negative operating profit impact of around £444m. CEO Bjørn Gulden emphasized the need to focus on core business aspects and strengthen the adidas culture.
Factuality Level: 8
Factuality Justification: The article provides accurate information about Adidas’ financial performance, including specific numbers and quotes from the CEO. It also explains the reasons behind the decline in profits, such as the termination of the Yeezy partnership and increased costs. However, it could provide more context on the macroeconomic challenges and geopolitical tensions mentioned.
Noise Level: 3
Noise Justification: The article provides relevant information about Adidas’ financial performance and its impact from the termination of the Yeezy partnership with Kanye West. It also includes quotes from the CEO on future plans for the company. However, it does not contain any exaggerated or irrelevant information, nor does it dive into unrelated territories. The article supports its claims with specific financial figures and provides actionable insights about Adidas’ focus on reducing inventories and lowering discounts to build a profitable business again.
Financial Relevance: Yes
Financial Markets Impacted: Adidas’ stock price
Financial Rating Justification: The article discusses Adidas’ financial performance, including gross profit decline, EBITDA drop, and projected operating profit for 2023. This information is relevant to investors and can impact the company’s stock price in financial markets.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: There is no extreme event mentioned in the article.
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