Unsold Yeezys have been hanging around at Adidas since the German sportswear company decided to end its partnership with Ye, the rapper formerly known as Kanye West.
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The company is expected to lose more than $770 million if it doesn’t sell the millions of Yeezys piling up in its warehouses, according to its May 5 earnings announcement.
However, since the collaboration ended due to the rapper’s anti-Semitic remarks, Adidas has been reluctant to cash in on the boots co-designed with Ye. Yeezy sales stopped immediately.
At Adidas’ annual shareholder meeting yesterday (May 11), CEO Bjørn Gulden announced that the brand intends to “sell portions of this inventory and donate money to the organizations that help us that were also impacted by Kanye’s statements.” quoted in CBS News.
But selling Yeezys wouldn’t just be an act of charity. As Guden confirmed in March, the rapper benefits from royalties on all shares sold by Adidas.
The future of Yeezys
Although the line was discontinued, destroying existing products was a step too far. Gulden told investors that “several million pairs will be burned.” [of shoes] makes no sense.” Details of how and when inventory will be offloaded have yet to be determined.
Meanwhile, Adidas can technically produce more Yeezy sneakers even without Ye. The company owns all patents and copyrights for the intellectual property, the designs and the coloring. It can omit the branding, abandon the “Yeezy” name, and resell the shoe.
However, analysts warn against it. The shoes “will always be synonymous with West, and that would likely result in subdued consumer demand,” said Darcey Jupp, apparel analyst at GlobalData.
Adidas’ Yeezys business in numbers
$2 billion: Yeezy sales in 2021
8th %: Yeezys accounted for part of Adidas’ total sales
1.2 billion euros ($1.3 billion): Adidas will forego revenue in 2023 if it doesn’t sell Yeezy stock
15%: Royalties Ye receives from Yeezy products. However, he wanted 20%.
20%: Sales declined in North America as “the region is particularly affected by the shutdown of Yeezy business.” Excluding Yeezy, sales fell 5%.
One more thing: Most of Ye’s net worth came from his collaboration with Adidas Yeezy
Several companies, including fashion house Balenciaga and retailer FootLocker, have severed ties with Ye following his anti-Semitic tirade. But the Adidas severance payment hurt the most. Losing the Yeezy contract alone was enough to remove Ye from billionaire status, as the deal accounted for most of the musician’s net worth, according to Forbes.
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