Adidas’ decision to sever ties with Kanye West has proven to be a significant risk, as the company still has over $500 million worth of his sneakers to sell, minus his name.
Adidas Faces Big Loss
We always knew Adidas planned to offer unbranded Yeezys after the separation, but now we have a better understanding of why.
As reported by Financial Times, Adidas is reportedly resting on a pile of Yeezys, as per company sources.
According to the source, the company’s stockpile is valued at approximately $530 million. Adidas is reportedly keen to get rid of it in order to prevent taking an even larger loss compared to what it has already stated publicly.
This is currently pretty dismal for end-of-year data.
Adidas is apparently having difficulty trying to figure out how to shift an astonishing number of shoes.
A recent Financial Times article describes how closely Adidas was wedded to Yeezys and how much its success depended on the brand.
In 2022 alone, Yeezys earned Adidas well over $1.8 billion and almost 7% of the company’s overall revenue. The story also indicates that Yeezy has been a consistent product for Adidas dating back to at least 2019.
This may explain why Adidas held off for so long on breaking all ties to Kanye — he and his business label were essentially its cash cow.
Adidas really stole Kanye’s shit n sellin it for $230 n not even callin it Yeezys… yeah see pic.twitter.com/3W8mS4qRp1
— ZAQQ *da 🐐 no 🧢* (@ProdByZAQQ) December 20, 2022
Adidas has supposedly already chosen a date for the launch of its first unauthorized Yeezy shoe, the Adidas 350 V2 “Granite.” It is expected to sell for $230 and launch in January.
This article makes it apparent that Adidas is depending on sneakerheads continuing to cop, since if they choose not to, the shoe manufacturer could be in danger.
Kanye, however, has not said anything at all about Adidas/Yeezy recently, other than to grumble in general. He has not indicated any intent to recapture it as his own intellectual property.
Adidas is panicking because they have $530 million in Yeezys inventory that they cant sell after cutting ties with Kanye “If they sell the Yeezy branded inventory they are legally required to pay kanye a 15% royalty in which they refuse to pay” pic.twitter.com/GYYIAYBIpt
— Black Millionaires ® (@Blackmillions_) December 24, 2022
Adidas AG decided to terminate its association with Kanye West as a result of the musician and designer’s disrespectful behavior, which transformed the once-thriving shoe company into a lightning rod for criticism.
The German sports corporation announced in October that it is severing ties with Ye, previously Kanye West, with immediate effect and will incur a €250 million ($246.5 million) loss in net earnings for the current fiscal year, corroborating a Bloomberg News report.
Kanye Slammed For Posts
The company said in a statement that Ye’s recent words and actions are reprehensible, hateful, and harmful; they contradict the firm’s inclusion, diversity, mutual respect, and fairness values.
Adidas joined Gap Inc. and Balenciaga by Kering SA in abruptly severing ties with West, now known as Ye.
In recent months, the rapper made contentious comments, along with anti-Semitic social media rants, and severed connections with his partner companies. Ye was not readily available for comment at the time.