HERZOGENAURACH (dpa-AFX) - The end of the partnership with controversial rapper Kanye West continues to weigh on Adidas in the new year. The board wants to examine how it can use the Yeezy products from the fashion collaboration with the artist, but also calculates to sit on the goods. This would reduce sales by around 1.2 billion euros and operating profit by half a billion euros. Shareholders did not like Thursday evening's announcement at all: with a slide in the share price, they sent Adidas shares to the bottom of the Dax on Friday morning.

The share price was last down eleven percent at 138.80 euros. Compared to the turn of the year, it has thus gained around nine percent.

At the beginning of November, the share price slipped to a multi-year low of around 93 euros following a profit and sales warning. The appointment of the new CEO Björn Gulden triggered a countermovement: Within it, the share price recovered to more than 160 euros by the beginning of February.

Now, however, Adidas surprised with bad news. In 2023, sales are likely to decline by a high single-digit percentage after currency adjustments, the sports fashion group announced in Herzogenaurach on Thursday evening. Even excluding special effects, operating profit is likely to be only around breakeven.

In addition, if Adidas decides to stop using Yeezy products altogether, the inventory would have to be written down, which would impact profits by half a billion euros. In addition, the Executive Board expects one-time costs in connection with measures to get the Group back on track. Should both effects fully materialize, it would lead to a total operating loss of 700 million euros, they said.

Analysts were unanimous in their view of the forecast warnings: Volker Bosse of Baader Bank described the outlook as "very disappointing" and "well below expectations". However, he had already expected that the new Group CEO Gulden would start his term of office with cautious words and some "clean-up work". He said this would lay the foundation for profitable growth.

According to RBC analyst Piral Dadhania, the end of the partnership with West will have a much more negative impact on Adidas' business than feared. He firmly expects the group to fully write off its Yeezy inventory. Adidas has homework to do, he said. For example, the corporate culture must be changed and something must be done about the fact that finished goods spend a comparatively long time in the warehouse. The industry expert cut his price target for Adidas shares by 20 euros to 110 euros and advises investors in this segment to rather buy shares of competitors Puma and Nike.

JPMorgan analyst Chiara Battistini expects a clear message from Adidas management when it presents its final financial results in early March to assess how short- or long-term the problems are. She called Thursday's news "effectively the third profit warning in four months."

New Adidas CEO Gulden made no secret of the problems, saying, "The numbers speak for themselves. We are currently not performing as well as we should be," he said, according to the statement. The manager had only taken over the leadership of the group from Kasper Rorsted at the beginning of the year. "2023 will be a transition year to create the basis to become a growing and profitable company again."

Gulden, who came from local rival Puma, wants to subject the group to a strategic review in order to return to a profitable growth path in 2024. The group expects to incur one-time costs of up to 200 million euros in 2023. Gulden wants to strengthen the brand again and improve product development and sales. "We have to put the pieces back together, but I am convinced that we will make Adidas shine again. But we will need some time to do that."

Last year, Adidas struggled with high inflation and problems in China. Added to that was the termination of its cooperation with Kanye West in part because of anti-Semitism allegations against the rapper. Sales rose six percent to 22.5 billion euros, according to preliminary figures released Thursday. Adjusted for currency effects, the increase was one percent. Thus, the manufacturer managed only the lower end of its repeatedly lowered growth forecast.

The gross margin, which attracted a lot of attention from analysts, fell from 50.7 to 47.3 percent, Adidas further reported. Operating profit slumped by around two-thirds year-on-year to 669 million euros. The bottom line was a profit from continuing operations of 256 million euros. In 2021, Adidas had still earned around 1.5 billion here. The Group had also lowered its earnings forecast several times last year. Here it has now reached the most recent forecast./ngu/nas/stw/mis