Adidas has recorded millions in revenue from their first Yeezy trainers drop amid closing their contract with Kanye West, a fashion designer and rapper. The sportswear company recorded about £344m in sales from shoe products between April and June 2023. In any case, the company ended its contract Ye with Kanye West in November 2022 following his anti-Semitic comments through social media pages. Adidas pledged to donate some sales proceeds to charities for combating hate speech.
Nonetheless, Yeezy shoe demand did not fade despite the contract termination, with top trainers wildly dominating the resale market. Bjorn Gulden, the Adidas boss, clarified that the company would carefully market and sell off the existing Yeezy products through the company’s financial update. Gulden argues continuing sales would be better than writing off and destroying the entire inventory. In simple terms, he acknowledged that the merchandise was critical for boosting Adidas' general financial strength.
The more robust Yeezy inventories’ demand enabled the firm to reduce their projected loss from the €700m they previously predicted to €450m for the year. In general, the Yeezy line sales were similar to the level it recorded through the same timeframe in 2022, earlier than this high-profile fallout. The company also secured about €110m for charity contributions to organizations like the Anti-Defamation League and the Organization for Combating Anti-Semitism.
Besides, Adidas announced the charity plan during the Kanye West online remarks start. Meanwhile, the firm announced in May that it had an average of €1.2bn Yeezy inventories in storage amid the end of its highly profitable partnership with Kanye West. The company explained on Thursday that it would bear up to €400m loss if it did not sell the stock. But the latest results stripped out the recent second trainers’ release that might give them a further financial boost.
Overall, JD Sports announced on Wednesday that it started selling the German sportswear giant’s inventories. But analysts believe that selling the Yeezy stocks remaining in the stores would be a short-term solution for the company since it lost some of its relevance and identity in the shoe market. They suggest that Adidas could be trailing behind competitors like Puma, equipped with innovative and more on-trend products.
Despite the company’s solemn efforts to solve the chaotic situation, investors have sued Adidas, claiming that it knew about Kanye’s behavior before it ended the contract. Most importantly, they lament that the company failed to take preventive plans to reduce risks and limit financial losses. The company previously explained that it rejected the unfolded allegations. Managers added that it might take all measures to defend investors from losses.
