Adidas should have known better than to follow Kanye West’s lead. Adidas has partnered with him to create the Yeezy fashion line. It began selling clothing and shoes in 2015.
Adidas ended its partnership with West last year after West made anti-Semitic comments. A fashion partnership that is anti-Semitic is bad for any company. But it’s worse for Adidas.
CNN reports that West said last year on a podcast, “I can’t say antisemitic and Adidas cannot drop”.
Adidas severed all ties with West after West made statements that were “unacceptable and hateful” and flouted “values such as diversity, inclusion, mutual respect, and fairness”.
Adidas holds over a billion dollars worth of Yeezy products in its inventory. This means that Adidas could lose that money if the product isn’t moved. Adidas’ annual sales of $2 billion were attributed to Yeezy or 10% of its revenue.
Adidas is in serious financial trouble. Adidas is in serious financial trouble. In the last year, its stock price has fallen by 45% and, this week, 11% of its value was lost on the Frankfurt stock exchange. The question is: What does Adidas do about all the Yeezy merch they have?
Adidas considered selling the items without the Yeezy label last fall when West’s antisemitism was on full display.
CNN reports that Adidas claimed that selling sneakers under its brand would help the company save about $300 million in royalties and marketing fees.
CNN was told by an analyst that Adidas might have difficulties selling the Yeezy stock as its own.
Burt Flickinger, a retail consultant, stated that there were no viable options for the distressed brand. He said this to the network.
Adidas could also decide to destroy the Yeezy sneakers and clothing or give them away to charity. Adidas has other problems than Yeezy, and no solution is perfect.
MarketWatch reports that Adidas expects a currency-neutral sales decline in the high single digits and an “underlying” operating profit to break even. It could get worse depending on Yeezy.
Adidas’s brand partnership with Beyonce is also causing problems. Adidas-Beyonce Ivy Park only generated $40 million in revenue in 2022. This is far below the projected sales figures.
The company will also conduct an “internal assessment” which will cost the company approximately $213 million. Adidas is currently at a crossroads in its sales.
“The numbers speak for them.” “We are not performing as well as we should,” stated CEO Bjorn Gulden, who assumed the helm in January. We need to put the pieces together again, but I am confident that Adidas will shine again over time. We need to take our time.
It is not exaggerated to say Adidas is in trouble. These high-profile brand partnerships and musicians are contributing to these problems. Adidas has a long way to go before it can make a comeback, but there are some positive signs.