Adidas to slash dividend to 0.70 euros per share after Kanye West split

BERLIN (Reuters) -Adidas said on Wednesday that it planned to slash its 2022 dividend to 0.70 euros ($0.7374) per share, after a year marked by losses resulting from its split from rapper and fashion designer Kanye West.

The German sportswear maker said its executive and supervisory boards would recommend the dividend at a May 11 annual general meeting. Its dividend a year earlier stood at 3.30 euros.

Adidas said that currency-neutral revenue had declined by 1% in the fourth quarter of 2022, taking into account a 600-million-euro loss from the termination of its partnership with the celebrity, which yielded the then-lucrative sneaker line Yeezy.

For 2023, the company predicted underlying operating profit at roughly break-even level when taking into account the sales loss should it fail to sell existing Yeezy stock.

“2023 will be a transition year to build the base for 2024 and 2025,” CEO Bjorn Gulden said in a statement. “We need to reduce inventories and lower discounts. We can then start to build a profitable business again in 2024.”

The end of COVID-19 lockdowns in China is expected to drive sales up across the major retail brands for whom China is a key market, but for Adidas that boost will likely be wiped out by the impact of the Yeezy split, making it hard for it to compete against rivals Nike and Puma.

Analysts at Wedbush who track new sneaker product launches said Nike is likely to take market share from Adidas in the absence of new Yeezy designs.

($1 = 0.9493 euros)

(Reporting by Alexander Huebner, Writing by Friederike Heine, Editing by Paul Carrel)