Adidas said on Wednesday that it planned to slash its 2022 dividend to 0.70 euros ($0.7374) per share, after a year marked by losses resulting from its split from rapper and fashion designer Kanye West.
The German sportswear maker said its executive and supervisory boards would recommend the dividend at a May 11 annual general meeting. Its dividend a year earlier stood at 3.30 euros.
Adidas (OTC:ADDYY) said that currency-neutral revenue had declined by 1% in the fourth quarter of 2022, taking into account a 600-million-euro loss from the termination of its partnership with the celebrity, which yielded the then-lucrative sneaker line Yeezy.
For 2023, the company predicted underlying operating profit at roughly break-even level when taking into account the sales loss should it fail to sell existing Yeezy stock.
“2023 will be a transition year to build the base for 2024 and 2025,” CEO Bjorn Gulden said in a statement. “We need to reduce inventories and lower discounts. We can then start to build a profitable business again in 2024.”
The end of COVID-19 lockdowns in China is expected to drive sales up across the major retail brands for whom China is a key market, but for Adidas that boost will likely be wiped out by the impact of the Yeezy split, making it hard for it to compete against rivals Nike (NYSE:NKE) and Puma.
Analysts at Wedbush who track new sneaker product launches said Nike is likely to take market share from Adidas in the absence of new Yeezy designs.