Adidas' decision to end its association with controversial entertainer Kanye West - now officially known as "Ye" - is an expensive one.
Not selling its massive buildup of "Yeezy" shoes and other items, the company says, could lead to a revenue loss of 1.2 billion euros ($1.3 million0).
"Should the company irrevocably decide not to repurpose any of the existing Yeezy product going forward," Adidas said, it would have to write it all off.
That, according to the company, would cut Adidas' operating profit an additional 500 million euros in 2023.
Added to other costs, the write-off could give the manufacturer a 2023 operating loss of some 700 million euros.
New Adidas CEO Bjorn Gulden says this year will be used as a "transition" to build the base stronger in 2024 and 2025.
"We need to reduce inventories and lower discounts. We can then start to build a profitable business again in 2024," Gulden said.
On March 8, Adidas reported that its 2022 net profit dropped 83% to 254 million euros, confirming the results reported in February.