Adidas Has Finally Decided What to Do With its Yeezy Stock
Adidas is facing a challenge with unsold Yeezy sneakers since the German sportswear company ended its partnership with rapper Kanye West.
The company could lose over $770 million if it fails to sell the millions of Yeezys accumulated in its warehouses.
However, Adidas has not been enthusiastic about profiting from shoes designed with Ye since the collaboration ended due to the rapper’s anti-Semitic comments. Consequently, Yeezy sales were halted immediately.
During Adidas’s annual shareholder meeting on May 11, CEO Bjørn Gulden stated that the company seeks to “sell parts of this inventory and donate money to the organizations that are helping us and that were also hurt by Kanye’s statements.”
Selling Yeezys would not just be an act of charity as the rapper stands to gain from royalties of any Adidas stock sold, as Guden confirmed in March. However, details on how and when the inventory will be offloaded are yet to be determined.
Adidas can technically produce more Yeezy sneakers even without Ye since the company has all the patents, copyrights, and designs for the IP and colorways.
The company can remove the branding, drop the name “Yeezy,” and continue selling the shoe. However, analysts warn against it, stating that the shoes will always be associated with West, resulting in muted customer demand.
Adidas’ Yeezy sales amounted to $2 billion in 2021, accounting for 8% of its overall sales. The company risks forfeiting €1.2 billion ($1.3 billion) in revenue in 2023 if it fails to sell the Yeezy inventory.
Ye gets 15% in royalties from Yeezy products, though he demanded 20%. North America recorded a 20% sales decline, mainly due to the discontinuation of the Yeezy business. Excluding Yeezy, sales were down 5%.
Several businesses, including fashion house Balenciaga and retailer FootLocker, cut ties with Ye following his anti-Semitic tirade. However, the Adidas severance had the most significant impact.
Losing the Yeezy contract was sufficient to strip Ye of his billionaire status since the deal was the most significant share of the musician’s net worth.
