Adidas warned on Thursday that failure to properly dispose its stock of Yeezy clothing created by Kanye West may result in a loss of operational profits of up to 1 billion Euros, or $1.07 billion.

The German shoe manufacturer issued a warning in its financial forecast for 2023, estimating that the initial “adverse impact” of not selling the products would be €1.2 billion in revenues, or around $1.3 billion, and €500 million, or roughly $533 million, in operating profit.

West, who now goes by Ye, was fired by Adidas in October due to the rapper’s racial and antisemitic statements. Until recently, Adidas’ Yeezy line contributed up to 10% of its total yearly sales, or almost $2 billion. It’s one of the explanations offered by observers as to why Adidas took longer than other companies to dissociate themselves from the controversial rapper Ye after Ye made a number of nasty comments against Jews while also sporting a “White Lives Matter” shirt.

Adidas eventually criticized Ye’s language.

After announcing the end of their partnership, the firm issued a statement saying, “Adidas does not accept antisemitism and any other type of hate speech.” The company’s ideals of diversity and inclusiveness, mutual respect, and fairness have been violated by Ye’s recent words and actions, which are inappropriate, harmful, and filled with hatred.

“Ye’s comments have cost him business deals with almost all other large brands, including Gap, Balenciaga, Footlocker, and TJ Maxx, with which he had previously had relationships.

However, it appears that Adidas’ bottom line will be most affected. Adidas warned on Friday that it might decide not to repurpose the Yeezy inventory even though some analysts had predicted it would be able to do so if the Yeezy label were removed. If this were to happen, the operating profit for the business would drop by an additional €500 million, or $533 million.

Related: Adidas Winning Lawsuit Against Luxury Brand For Use Of Stripes In Designs

In any case, the business stated that it anticipates one-time expenses of up to €200 million, or $213 million.

“The statistics are conclusive. Our current performance is below what it should be, according to Adidas CEO Bjrn Gulden. 2023 will be a year of change to lay the groundwork for the company to once again be expanding and profitable.

Adidas’ stock fell as much as 11% on Friday during trading on the Frankfurt Stock Exchange in Germany.


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