Adidas’ separation from rapper Ye, formerly known as Kanye West, may lead to significant financial losses for the company.
On Thursday, the German sportswear firm announced that it could face a revenue loss of approximately $1.3 billion in 2023 if it fails to sell its current Yeezy inventory, with an operating profit decrease of about $535 million.
Adidas ended its association with Ye last October due to his antisemitic comments on social media, ceasing the production of Yeezy-branded products.
At that time, the company labeled Ye’s remarks as “unacceptable, hateful and dangerous.”
As Adidas determines the fate of its existing Yeezy stock, it mentioned that its 2023 financial outlook “accounts for the significant adverse impact” of not selling the merchandise.
Should the company be unable to repurpose the products and is forced to write off the current Yeezy inventory, it anticipates an operating loss of nearly $750 million in 2023.
“The numbers speak for themselves,” stated Adidas CEO Bjørn Gulden. “We are currently not performing the way we should.”
A sign advertises Yeezy shoes made by Adidas at Kickclusive, a sneaker resale store, in Paramus, N.J., Tuesday, Oct. 25, 2022.
Adidas has ended its partnership with the rapper formerly known as Kanye West over his offensive and antisemitic remarks, the latest company to cut ties with Ye and a decision that the German sportswear company said would hit its bottom line.
Adidas and Ye first collaborated in 2013 and solidified their partnership in 2016 with what the company described as the “most significant partnership ever created between a non-athlete and an athletic brand.”
Following the termination of the partnership, Adidas stated it would attempt to sell the apparel without the Yeezy name and branding.
Adidas’ stock price closed Friday at $74.61, down by 0.73%. “We need to put the pieces back together again, but I am convinced that over time we will make Adidas shine again,” Gulden said. “But we need some time.”
