Adidas feared a €700 million loss. It made €268 million instead.
Adidas warned of a €700M operating loss for 2023 if it walked away from Yeezy stock. It sold the stock instead and posted €268M operating profit, with a €58M net loss driven by tax.
Transcript
In its 2022 annual report, Adidas warned that 2023 could bring an operating loss of around €700 million, if it walked away from its Yeezy inventory entirely.
The obvious move was a write-off. Adidas did the opposite. It sold the stock and pledged over €110 million in donations to anti-hate charities, including the Anti-Defamation League.
Those sales brought Adidas roughly €750 million in net sales in 2023, and about €300 million in operating profit.
So instead of a €700 million hole, Adidas's full-year 2023 operating profit landed at a positive €268 million. The turnaround story usually starts here.
But the record has a catch. Adidas did post a net loss in 2023: €58 million from continuing operations, driven by a 189.2% tax rate. By 2024, operating profit had jumped 398% to €1,337 million.
Before you write off a dead asset, price the salvage. And when a turnaround headline looks dramatic, check which line of the income statement it comes from.
The records behind this video
Every figure in the video comes from this Decision Record, each with its sources.
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