Adidas Aims for Revival by Clearing Malignant Inventory

UBS: "Adidas to Expand Shelf Space Amid Nike's Weakness"

German sports brand Adidas has disposed of all the problematic inventory it inherited following its split with hip-hop star Kanye West (also known as Ye) and is aiming for sales growth and market share expansion this year, the Wall Street Journal (WSJ) reported on the 5th (local time).

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Adidas announced on the same day that it expects a single-digit percentage increase in sales growth this year. Operating profit is anticipated to rise to a maximum of 1.8 billion euros (approximately 2.8 trillion won). The company also completed the sale of 'Yeezy' brand sneakers that remained in inventory from last year. Adidas explained that Yeezy's sales or profits are not included in this year's guidance.

Yeezy is a brand created in collaboration with West. Adidas terminated the contract in October 2022 after West sparked controversy with anti-Semitic and Nazi-sympathizing remarks, inheriting 1.2 billion euros worth of inventory. As a result, Adidas recorded a loss for the first time in 31 years in 2023.

In 2023, Adidas appointed Bjørn Gulden, formerly of Puma, as CEO and initiated restructuring efforts including brand repositioning and inventory clearance. In the fourth quarter of last year, sales turned to double-digit growth in regions including North America and China. Notably, sales increased by 16% in regions including China, Taiwan, Hong Kong, and Macau.

Net loss in the fourth quarter of last year was 39 million euros, significantly down from 379 million euros in the same period the previous year. CEO Gulden said, "The company is entering this year in a strong position," adding, "We can aspire to be number one in all markets except the United States."

Rival company Nike, struggling with poor performance, also replaced its CEO last year and is striving to regain market share. Elliott Hill, who took over as Nike CEO in October last year, criticized excessive discounting policies and emphasized a premium strategy.

Global investment bank UBS forecasted, "Adidas will be able to secure shelf space together with wholesale partners amid Nike's continued weakness."