German sportswear giant Adidas unveiled plans to slash its dividend on Wednesday, reiterating warnings the company could face its first annual loss in decades following the costly decision to split with rapper and designer Kanye West and scrap their lucrative joint brand, Yeezy.
Adidas said it will propose an annual dividend of $0.74 (€0.70) per share at its annual general meeting on May 11.
The proposed payout is down from $3.48 (€3.30) per share in 2021, a cut of nearly 80%.
Adidas reported losses of $508 million (€482 million) for the fourth quarter of 2022, largely reflecting falling sales in China and the company’s split with West, also known as Ye, which it said cost it $632 million (€600 million) in sales.
Adidas reiterated warnings the company is on track for its first full-year loss in decades, projecting losses of more than $700 million.
The company said it stands to lose $527 million (€500 million) in 2023 if it cannot sell or repurpose Yeezy shoes left over from its partnership with West, which were estimated to bring in $1.26 billion (€1.2 billion) in revenue this year.
CEO Bjørn Gulden said 2023 will be a “transition year” for Adidas to reinvigorate its core business and build a path to profitability in 2024.
Yeezy was a significant and lucrative source of income for Adidas and its loss is being felt keenly. It has compounded existing strains on the firm’s finances, notably troubles in the Chinese market and exiting from Russia after it invaded Ukraine. Executives have been blunt about its likely impact for the year ahead and the mountain of unsold Yeezy stock looms large over the company’s balance sheet. In February, Gulden said Adidas’ “numbers speak for themselves,” adding: “We are currently not performing the way we should.”
Adidas was one of many companies to sever ties with West in October amid public outrage over the rapper’s antisemitic comments on social media, in addition to him promoting baseless conspiracy theories and making racist remarks. His partnership with Adidas was one of his most commercially important and the source of the majority of his net worth. West fell off Forbes’ billionaires list when it was terminated.