As a manager, you have to get comfortable having difficult and uncomfortable conversations.Įd Catmull, cofounder of Pixar Animation Studios wrote in Creativity, Inc on the value of candor in management: Some of the most dangerous things that can undermine a good team are the things that go unsaid. RBC analysts said they see the full write-down as the most likely scenario.Īnalysts at Wedbush who track new sneaker product launches said Nike is likely to take market share from Adidas in the absence of new Yeezy designs.1) Talk about the elephants, and why you're staying That, along with $200 million of one-off costs, would bring Adidas to a $700 million loss this year. If Adidas decides not to repurpose the products, it will write the inventory off altogether, denting profit by another $500 million. The company forecast 2023 underlying operating profit at roughly break-even when taking into account the $500 million loss from not selling existing Yeezy stock. Inventories came in at just under 6 billion euros at the end of December, up 49% from the previous year, including 400 million euros of Yeezy products. Overall, Gulden said Adidas needed to reduce inventory levels and do less discounting. "For the first time in a long, long, time people are lining up to buy an Adi product that is not Yeezy." LESS DISCOUNTING He said a pop-up store in Shanghai selling Samba shoes drew queues of shoppers earlier this week. One area of growth he pointed to was a trend for "terrace" style sneakers like the Samba, Gazelle, and Spezial. Plugging the gap left by Yeezy will not be easy, Gulden said. Gulden said ending Yeezy - a decision that predated his taking the helm - was the right thing to do but added that it was "very sad" and that it would take time for Adidas to build a new brand that is as influential. The split cost Adidas 600 million euros ($632 million) in sales in the fourth quarter of 2022, and Yeezy shoes would have brought in an estimated $1.2 billion in revenue this year.
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