Adidas could lose around 1.2 billion euros ($1.3 billion) in revenue in 2023 if it is unable to sell its existing Yeezy stock.
The German sportswear company scrapped its partnership with rapper and fashion designer Ye, formerly known as Kanye West, the face of Yeezy, in October after he made a series of antisemitic comments.
The company said late Thursday that it is assessing what to do with the Yeezy inventory, adding it has already accounted for the "significant adverse impact" of not selling the products.
Operating profit would drop by about 500 million euros if the company fails to shift the products, and Adidas expects sales to decline at a high single-digit rate in 2023. Adidas could opt to write off its remaining Yeezy products.
Shares sank 11% Friday morning as traders reacted to the announcements.
The company also forecast one-off costs of up to 200 million euros, leaving Adidas' worst-case scenario for the year as a 700 million euro loss for 2023.
"The numbers speak for themselves. We are currently not performing the way we should," Adidas CEO Bjørn Gulden said in a press release.
Adidas' revenues increased 1% in 2022, based on unaudited numbers, while operating profit dropped from almost 2 billion euros in 2021 to 669 million euros in 2022.
