Adidas problems are deeper than Yeezy Adidas problems are deeper than Yeezy Adidas problems are deeper than Yeezy

Adidas problems are deeper than Yeezy

Peter Garnry

Head of Equity Strategy

Summary:  Since the early days of the pandemic Adidas has been living a nightmare significantly underperforming its main competitor Nike. Adidas has gone from one problem to the next. It started with lockdowns, then supply chain issues around its factories, then the fallout in China over comments about Xinjiang cotton, and in October it terminated its successful partnership with Ye following antisemitic comments. It turns out that Adidas had increased its business risk substantially by allowing the Yeezy collection to become the dominant part of operating income. We take a look at Adidas and why the problems are deeper than just Yeezy.

Catastrophic 2023 outlook send Adidas shares down 12%

Adidas announced yesterday after the European market close that it now expects €700mn in operating loss for 2023 as the German sports clothing maker has decided not to sell its existing inventory of Yeezy items until a review is carried out. Adidas terminated its partnership with Ye, formerly known as Kanye West, back in October 2022 over antisemitic comments from Ye. The impact on Adidas’ business is profound with €1.2bn in lost revenue in 2023 which will lower revenue by high-single-digit this year.

Should Adidas decide not to repurpose the existing Yeezy items in inventory and sell those under Adidas own brand then the inventory will written off and the operating income will be lowered by an additional €500mn. The company is also announcing €200mn in one-off items which is mostly part of a strategic review which is been carried out to reignite growth in 2024.

The problem seems to be Yeezy, but that it is only part of the problem. If you remove the hit to operating income from the Yeezy business line then the company would barely be above break-even this year. That is in sharp contrast to previous years. One thing is that management has allowed one partnership to become such a large part of the operating income increasing the business risks, but another thing is to almost not be profitable when adjusting for Yeezy on €22bn of revenue. Something very deep is broken at Adidas.

Also if we take a look at the revenue growth trajectories of Nike and Adidas, we can see that Adidas has massively underperformed Nike and that is even before the Yeezy fallout. Part of that is declining revenue in China as Adidas’ comments about Xinjiang cotton in relation to Western countries imposing sanctions on China. These comments combined with rising domestic sport clothing companies in China and Chinese consumers choosing domestic brand have materially impacted Adidas business. But even if we strip out the weakness in the Chinese business and the fallout from Yeezy that does not make up for the lower revenue growth compared to Nike.

At only 45% of the size of Nike in terms of revenue and these growing problems and a lost year on a strategic review, Adidas is in a hurry. They need to catch up fast or risking being left at the station and never catching up with Nike.

Adidas share price | Source: Saxo

The Saxo Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (
- Full disclaimer (

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo or its affiliates.

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK Limited (“Saxo”) is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo holds a Type 1 Regulated Activity (Dealing in Securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged Foreign Exchange Trading); Type 4 Regulated Activity (Advising on Securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products may result in your losses exceeding your initial deposits. Saxo does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo does not take into account an individual’s needs, objectives or financial situation. Please click here to view the relevant risk disclosure statements.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

The information or the products and services referred to on this site may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and services offered on this website are not directed at, or intended for distribution to or use by, any person or entity residing in the United States and Japan. Please click here to view our full disclaimer.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc. Android is a trademark of Google Inc.