Proactive Investors - adidas AG (OTCQX:ADDYY) expects to sell €350 million worth of Yeezy stock in the current financial year, coming up to two years after the fashion group cut ties with Kanye West and his brand.
Previous sales guidance for the controversial rapper’s remaining stock was €250 million, however, after a strong first quarter, in which €150 million of Yeezy items were sold, forecasts have been increased to €350 million.
Adidas (ETR:ADSGN) maintains that the inventory, which has accumulated after the collaboration was terminated in October 2022, will be sold on average at cost, but has lifted its bottom-line guidance to account for the stronger-than-expected Yeezy sales in the first quarter.
Some €50 million is expected to be added to Adidas’ full-year operating profits because of Yeezy sales, up from previous predictions that the revenues would not contribute at all.
Based on the growth of Yeezy sales and an overall better-than-expected first quarter, the German retailer is expecting operating profits to reach €700 million in the full year, compared to prior guidance of €500 million.
Earlier this month, shares in the group rallied to a two-year high after it beat expectations for the first quarter and upped its full-year guidance.
First-quarter revenues jumped 8% while operating profits rose to €336 million from €60 million a year prior.
Full-year revenues are now expected to rise by a "mid- to high-single-digit" percentage.
Bjorn Gulden, Adidas chief executive, said: “We will continue to ‘over invest’ into the product, into the brand, into sales and marketing to ensure continued growth.
“We will not try to optimize short-term profit. We know we are not as good as we should be, but I feel that we are making the progress that we had hoped for.”