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Adidas confirmed its 2023 operating profit was 268 million euros ($292.9 million), thanks to flat currency-neutral sales, significantly above previous expectations as the company continues to be hammered by the discontinuation of its line of Yeezy – shoe retailer the retailer produced in collaboration with American rapper Ye, formerly known as Kanye West.

The company recorded an operating loss of 377 million euros in the fourth quarter. The board has proposed a flat dividend of 0.70 euros per share.

“Although it was still nowhere near good enough, 2023 ended better than I expected at the beginning of the year,” CEO Bjørn Gulden said in a statement.

“Despite the loss of revenue from Yeezy and a very conservative sales strategy, we managed to achieve stable sales. We expected a material negative operating result, but achieved an operating profit of €268 million.”

Adidas confirmed preliminary results released in late January when it announced it would not write down most of its Yeezy inventory and instead sell the remaining shoes at cost.

The sportswear giant was forced to discontinue the Yeezy line after ending its partnership with Ye due to a series of anti-Semitic comments the rapper made in 2022.

Adidas said the discontinuation of Yeezy represented a drag of around 500 million euros in the year-on-year comparison through 2023, although sales of portions of remaining inventory in the second and third quarters had a positive impact on net turnover of approximately 750 million euros.

“With a highly disciplined go-to-market and purchasing process, we have reduced our inventories by almost €1.5 billion. With the exception of the US, we now have healthy inventories everywhere,” said Gulden.

He added that the company expects some growth in the first quarter of 2024 and a further recovery in the second half of the year.

“We still have a lot of work to do, but I am confident that we are on the right track. We will bring Adidas back again. Give us some time and we will say again: we have this!” he said.

Adidas forecast operating profit of around 500 million euros in 2024, with adverse currency effects expected to “weigh significantly on the company’s profitability” due to negative impacts on both reported sales and gross margin development.

Adidas shares were flat mid-morning on Wednesday.

Mamta Valechha, equity research analyst at Quilter Cheviot, said that given the key figures had already been released in January, the most interesting aspect of Wednesday’s report was the “clear acceleration of the Adidas brand”.

“For Adidas and the sportswear industry in general, performance will be back to half-weighted, with the first half still impacted by initiatives to reduce increased inventories, especially in North America,” she said by email.

“As a result, retailers’ order books are still weak for the first half of the year as they are quite cautious. However, demand is expected to pick up thanks to the Olympic Games and European Championships this summer.”

Adidas wants to return to sales growth by scaling up successful shoe lines such as Samba and Gazelle while introducing new lines.

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