Adidas, the prominent German sportswear brand, disclosed its inaugural annual deficit in over thirty years, attributing it to obstacles encountered in the North American market and persistent disruptions within its supply chain.
The Chief Executive Officer of the company, Bjorn Gulden, emphasized the enduring difficulties in the United States, envisioning a further downturn in sales within the region due to complications in managing inventory faced by sportswear vendors.
This setback arises as Adidas contends with the repercussions of terminating its association with Kanye West in 2022, resulting in the cessation of sales for the highly profitable Yeezy sneaker collection.
Since assuming leadership, CEO Bjorn Gulden has embarked on a comprehensive strategic revamp, concentrating on revitalizing pivotal product ranges such as the Samba and Gazelle shoes while strengthening ties with retailers.
Despite these endeavors, Adidas foresees a formidable year ahead, predicting a 5 percent reduction in sales for North America.
The company recorded a substantial decline in sales during the fourth quarter, with North American sales plunging by 21 percent, contributing to an overall 16 percent downturn for the fiscal year.
The detrimental repercussions of inventory management complications were evident, compelling Adidas to implement measures aimed at mitigating the situation.
By liquidating stock through outlet stores, the company succeeded in reducing inventories by 1.5 billion euros in 2023, marking a significant 24 percent decrease.
However, persistent challenges endure, exacerbated by shipment delays arising from the Red Sea crisis.
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