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Adidas Faces Challenge of Disposing $1.3 Billion Worth of Yeezys After Kanye West Split

1 year ago

How is Adidas getting rid of $1.3 billion worth of Yeezys now that it has parted ways with Kanye West? Adidas is still trying to figure out how to dispose of $1.3 billion worth of Yeezy sneakers, according to a Chicago Sun-Times report on Wednesday (March 8). Adidas CEO Bjorn Gulden said on a conference call on Wednesday that selling Ye’s kicks would mean paying royalties to the former sportswear company’s ex-president. Ye was fired five months ago for his anti-semitic remarks on social media. Several options were presented to Gulden. According to the CEO, some companies offer recycling solutions, but destroying sneakers could raise sustainability concerns. Restitching them to cover up the Yeezy name is not an option, according to Gulden, because it’s not very honest.

Giving Yeezys to people in need, such as those who have been affected by the Syrian earthquake or who are in poor countries, seems ineffective since these goods will be resold very quickly. Gulden said that wasn’t an option. Despite these suggestions, Adidas CEO promised that any profits from the sale of the remaining Yeezy sneakers would be donated to charitable organizations. Gulden promised that the people who have been hurt will also benefit from this by getting donations and proceeds in different ways, shapes, or forms. Kanye West’s partnership with Adidas ended in October 2022. According to an agreement reached with Ye in February of 2023, the sportswear company will sell all remaining Yeezy sneakers worth $500 million by then. As a result of the scandal, Adidas is expected to take a financial hit of $1.3 billion.

Is Adidas Going To Be Able To Get Rid Of The $1.3 Billion Worth Of Yeezys After Kanye West Splits With Adidas?

Since Adidas broke up with Kanye West, it has struggled to dispose of 1.2 billion euros ($1.3 billion) worth of Yeezy sneakers, causing the German sportswear maker to incur a large loss at year’s end and expecting further losses. A recent interview by Adidas CEO Bjorn Gulden stated selling the popular shoe line would require paying royalties to Ye, who was fired five months ago for making antisemitic remarks. There are many variables involved in dealing with the shoes currently stacked up in warehouses, he said during Wednesday’s earnings call. According to Gulden, who was named CEO after Ye’s remarks blew up, destroying them could raise sustainability issues. Some companies, however, have offered recycling solutions. In his view, restitching them to conceal the Yeezy brand for the purpose of selling them is not very honest, so it’s not an option. It’s not really an option to give them away to people in need in places like earthquake-hit Syria or Turkey, because their high market value would make the product come back very quickly, Gulden said.

In the event Adidas sells the shoes, I can promise you that those who have been hurt will also benefit, as they will receive donations and proceeds in different ways, the CEO said. After being pressured to do so by other brands over Ye’s antisemitic remarks, Adidas split with Ye in October. Analysts have estimated that the Yeezy line accounted for as much as 15% of the company’s net income. The company is now trying to become profitable again and replace its banner Yeezy line. As a result of Ye’s breakup in 2022, the company lost 600 million euros in sales, contributing to its 513 million euro loss. It contrasts with a profit of 213 million euros in the fourth quarter of 2021, which was also attributed to higher supply costs and a slump in revenue in China. In the event that it decides not to repurpose the remaining Yeezy products in stock, the company forecasts a 500 million euro hit to profit earnings this year. In 2023, the company expects to lose 700 million euros in operating losses.

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