Adidas is facing a class action lawsuit filed by shareholders who claim the sportswear brand knew about Kanye West’s problematic behavior years before ending their partnership over his antisemitic comments. The German sportswear giant, experienced a significant decline in its stock prices after dropping the Yeezy brand. The company severed ties with rapper and fashion designer Ye, formerly known as Kanye West, in October following his antisemitic remarks on social media.
This decision had a considerable impact on Adidas’ financial performance and stock prices. The company’s stock fell by 45% since the beginning of the year, with an 11.5% drop to $138.50 a share on February 10, 2023, after Adidas issued a warning about potential revenue loss. Yeezy accounted for approximately 10% of Adidas’ annual revenue last year, and terminating the deal resulted in a $246 million hit to its bottom line.
Adidas warned that it could lose around $1.3…
billion in revenue in 2023 if it is unable to sell its existing Yeezy inventory, and operating profit would fall by about $535 million. The company also forecast one-off costs of up to 200 million euros, leaving Adidas’ worst-case scenario for the year as a 700 million euro loss for 2023.
Adidas CEO Bjørn Gulden acknowledged the company’s underperformance, stating, “The numbers speak for themselves. We are currently not performing the way we should.” In 2022, Adidas’ revenues increased by only 1%, while operating profit dropped from almost 2 billion euros in 2021 to 669 million euros in 2022.
The shareholders allege that Adidas failed to mitigate their financial losses or take precautionary measures to minimize their exposure, which led to a sharp decline in the company’s stock after the Yeezy brand was dropped.
The lawsuit accuses former Adidas CEO Kasper Rorsted and CFO Harm Ohlmeyer of either intending to deceive investors or acting with reckless disregard for the truth by failing to disclose issues between the company and Kanye West, now known as Ye…
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