May 26, 2024

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Adidas Plans to Clear Remaining Yeezy Inventory at Cost Price After Kanye West Fallout

German sportswear giant Adidas has revealed its strategy to offload the remaining Yeezy sneakers from its terminated collaboration with Kanye West, popularly known as Ye. The decision comes as the company seeks to recover losses incurred after severing ties with the rapper and fashion designer in 2022 due to antisemitic remarks on social media. Despite Adidas facing a €1 billion setback from currency fluctuations, it reported an operating profit of €268 million in 2023, with expectations of nearly doubling that figure in the current year.

Adidas attributed the improved financial outlook to a €100 million boost in operating business and the choice not to write off €268 million associated with Yeezy inventory. The company’s CEO, Bjørn Gulden, who joined from rival Puma in 2023, played a pivotal role in steering Adidas through the aftermath of the Yeezy brand breakup, which left the company with unsold sneakers valued at around €1.2bn.

While Adidas plans to sell the remaining Yeezy stock at a minimum of the production cost, it still faces a potential write-off of approximately €300 million. The move reflects the company’s determination to mitigate losses tied to its once-thriving partnership with Kanye West. Despite the challenges, Adidas remains resilient, aiming to capitalise on the enduring demand for Yeezy sneakers in the resale market.

The financial impact on Adidas in 2023 was exacerbated by currency devaluation in Argentina, where the company’s financial results were adversely affected. Argentina’s President, Javier Milei, initiated a drastic devaluation of the peso, leading to adverse consequences for companies operating in the region. Puma, a rival sportswear firm, also acknowledged the impact of Argentina’s currency devaluation on its financial performance, emphasising the challenges faced in the company’s biggest and fastest-growing market.