Adidas, the renowned sportswear giant, has reported impressive sales of €400m (£344m) from its first release of Yeezy trainers between April and June 2023. This success comes after Adidas severed ties with rapper and fashion designer Kanye West, also known as Ye, in November 2022 due to his controversial anti-Semitic comments on social media. In an effort to combat hate, Adidas has pledged to donate a portion of the proceeds from the Yeezy sales to charities.
Despite the separation, the demand for Yeezy shoes remains strong, especially in the resale market where they continue to be wildly popular. Bjorn Gulden, CEO of Adidas, announced that the company will strategically sell off the existing Yeezy inventory instead of destroying it, contributing to the company’s overall financial strength. This decision has helped narrow the projected loss for the year to €450m, significantly better than the previously expected €700m.
Sales from the Yeezy line in the mentioned period were comparable to the same timeframe in 2022, before the high-profile fallout. To fulfill its commitment to combating hate, Adidas has allocated €110m for charitable donations to organizations such as the Foundation to Combat Anti-Semitism and the Anti-Defamation League. These donations were previously announced following Kanye West’s controversial remarks online.
In May, Adidas disclosed that it had approximately €1.2bn worth of Yeezy shoes in storage following the profitable partnership’s termination. If the remaining inventory is not sold, the company anticipates a loss of about €400m.
While the recent financial results do not include the impact of the second release of Yeezy trainers, which is expected to provide a further boost, JD Sports has already begun selling Yeezy products from this new collection.
However, Alice Price, associate apparel analyst at research firm GlobalData, argues that the sale of remaining Yeezy stock is a short-term solution for a brand that has lost some of its identity and relevance in the market. She suggests that Adidas lags behind competitors like Puma, which offer more on-trend and innovative products.
Despite CEO Bjorn Gulden’s efforts to address the situation, Adidas faces legal action from investors who claim that the company was aware of Kanye West’s problematic behavior years before terminating the partnership. These investors allege that Adidas failed to mitigate financial losses and take precautionary measures to minimize their exposure. Adidas firmly denies these allegations and asserts that it will vigorously defend itself against them.
