By Joshua Kirby


Adidas AG will end its partnership with rapper and designer Kanye West and their joint Yeezy label immediately after a series of controversies, the German sportswear giant said Tuesday.

The decision will result in a drag of up to 250 million euros ($246.9 million) on the company's net profit for 2022, Adidas said, noting the high seasonality of the last quarter of the year.

The company said it will immediately end production of Yeezy-branded products and stop all payments to Mr. West, who also goes by the name Ye.

"Adidas does not tolerate antisemitism and any other sort of hate speech. Ye's recent comments and actions have been unacceptable, hateful and dangerous, and they violate the company's values of diversity and inclusion, mutual respect and fairness," Adidas said.

Earlier this month, the company said it was placing the partnership under review, despite repeated attempts to privately resolve disputes with Mr. West. The designer has invited controversy with gestures and statements seen as racist and antisemitic, and has also criticised the company, as well as Chief Executive Kasper Rorsted personally, on his social media channels.

Adidas and Mr. West have been in partnership since 2016 on the successful Yeezy label of sneakers. The musician also produced designs for several years in partnership with Adidas's main rival, Oregon-based Nike Inc.

The end of the Yeezy collaboration, and resultant financial drag, is the latest headache for Adidas, which last week cut its outlook for the year for the third time in less than six months. The company blamed the latest profit warning on worsening consumer sentiment in Western markets, as well as major one-off costs relating to its exit from Russia, adding to persistent squeezes on demand in lockdown-struck China.

Yeezy sales are likely a material driver of Adidas's top-line growth in North America, analysts at UBS and JPMorgan said when the news of the review was made public. But the hit could be more than financial, JPMorgan's Chiara Battistini said in a note, pointing to the "halo effect" brought about by association with the high-profile Mr. West. A break-up could be painful, she said, beyond the short term.

Shares lose ground Tuesday, trading 3.8% down at EUR99.85 at 1052GMT.


Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby


(END) Dow Jones Newswires

10-25-22 0711ET