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 Saxo Strats

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 Bank 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 Bank 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 Bank 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 Bank 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 Bank 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 Bank 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 (
- Full disclaimer (

Boulevard Plaza, Tower 1, 30th floor, office 3002
Downtown, P.O. Box 33641 Dubai, UAE

Contact Saxo

Select region


Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

Saxo Bank A/S is licensed by the Danish Financial Supervisory Authority and operates in the UAE under a representative office license issued by the Central bank of the UAE.

The content and material made available on this website and the linked sites are provided by Saxo Bank A/S. It is the sole responsibility of the recipient to ascertain the terms of and comply with any local laws or regulation to which they are subject.

The UAE Representative Office of Saxo Bank A/S markets the Saxo Bank A/S trading platform and the products offered by Saxo Bank A/S.