German footwear and apparel company Adidas reported an annual loss on Wednesday for the first time after 30 years of profits, as CEO Björn Gulden tries to turn the brand around following a scandalous split with rapper Kanye West.

Adidas cut ties with West in October 2022, halting sales of its highly profitable Yeezy sneaker brand.

In his first year as Adidas CEO, Goulden decided to revive sales of the Yeezi sneaker to clear inventory while trying to boost the popularity of brands like the Samba and Gazelle.

Adidas’ share price has returned to an uptrend following its efforts, outperforming rivals Nike and Puma.

“While 2023 was far from a good year, it ended better than I expected at the start of the year,” Goulden said.

His comments came after Adidas reported a loss for the final quarter of 2022 early last year, but the overall balance sheet at the end of that year was positive. But the losses Adidas is now reporting indicate a negative annual result for the first time after more than 3 decades of growth.

But Adidas said it expects its sales to improve this year and expects double-digit growth in the second half of 2024.

Adidas to pay dividend for 2023 despite losses

The company’s board of directors announced that it would propose a dividend of 0.70 euros per share for 2023, the same as last year, despite a net loss of 58 million euros, Adidas’ first since 1992.

Adidas is betting it can increase its market share as some of its competitors announced layoffs amid a general decline in demand for athletic shoes and apparel.

Just last month, Nike announced it would cut 2 percent of its global workforce, the equivalent of more than 1,600 jobs, to cut costs amid falling demand.

Instead, Adidas, despite a negative financial result, received increased sales of its “everyday” sneakers Samba and Gazelle and decided to increase production.

“It’s clear that things are going in the right direction at Adidas after Bjorn Gulden took over,” Thomas Jokel, portfolio manager at Union Investment, told Reuters.

Kanye West’s brand remains profitable for Adidas

Adidas expects sales in North America, its second-biggest market, to fall this year, but that will be offset by a strong recovery in China.

As for the Yeezy brand, the stock sale brought Adidas total revenue of 750 million euros last year and a profit of 300 million euros for the sneaker line.

The company announced that it will donate 140 million euros of this amount to charities fighting racism and anti-Semitism.

Adidas has terminated its partnership with Kanye West over anti-Semitic messages he posted on social media. Because of this, the fashion house Balenciaga also decided to stop cooperation with the American rapper.