Adidas' profit warning leads to Moody's credit rating cut to A3

Moody's dowgraded Adidas' long-term issuer rating from A2 to A3 due to the company's recent profit warning.

There’s a possibility of a further downgrade as it maintained a negative outlook on the sportswear maker.

On Feb. 9, Adidas said that it could plunge to a loss this year for the first time in three decades.

The latest downgrade was triggered by its split from Kanye West, which raised the possibility of writing off the inventory of the Yeezy brand.

According to Moody's, although it had expected Adidas to suffer a weak operating performance in the next 12 to 18 months, the guidance was "well below Moody's expectations."

Moody’s described Adidas’ new outlook as conservative and noted its leading position in the global sportswear industry and strong brand, However, the negative outlook reflected "the substantial uncertainty around the near-term improvements of Adidas' credit metrics and liquidity profile.