Evan Nierman, founder and CEO of Red Banyan, and Eric Yaverbaum, CEO of Ericho Communications, discuss how Adidas handled the Ye controversy in The Claman Countdown.
Adidas is considering the possibility of writing down the outstanding Yeezy inventory that the sportswear company still has.
The company said Wednesday that write-downs on those products, which it developed during its previous partnership with Ye, the rapper formerly known as Kanye West, amounted to about $321 million (300 million euros). could if it chooses this path. It’s still considering options like selling more to consumers.
CEO Bjorn Gulden on Wednesday called a possible writedown the “financially worst-case scenario,” the Associated Press reported.
This comes at a time when Adidas has made efforts to reduce its Yeezy inventory, launching two sales over the summer. As part of the initiative, a portion of the proceeds were also donated to charities.
ADIDAS RECEIVES 437 MILLION USD THROUGH YEEZY STOCK SALES
Limited edition shrink-wrapped Adidas AG “Yeezy” model sneakers at sneaker resale store Presented By in London, August 13, 2021. (Hollie Adams/Bloomberg via Getty Images / Getty Images)
According to Adidas, the first sale at the end of May brought total sales of around 437 million US dollars (400 million euros). The second, in August, brought in $375 million (€350 million).
Adidas achieved sales of around 803 million US dollars (750 million euros) with the two Yeezy sales. According to the company, that was 37.5% less than the 1.2 billion euros that Yeezy earned in the first three quarters of last year.
| ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| ADDYY | ADIDAS AG | 91.05 | -1.34 | -1.45% |
The company said there were no Yeezy apparel sales in the first quarter.
“The discontinuation of the regular Yeezy business represented a burden of almost 450 million euros in the first nine months of the year compared to the previous year,” it said.
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Adidas first found itself in possession of tons of Yeezy shoes and other products when the company severed its relationship with Ye in October in response to the rapper’s alleged anti-Semitic comments. The apparel was reported to have a total value of $1.3 billion.
A shared photo of the Adidas logo on a sign and Kanye West in the Supreme Court in New York City (Portal/Andrew Kelly/File Photo I Steve Eichner/WWD/Penske Media via Getty Images / Portal Photos)
The company said on Wednesday that it “now expects a reported operating loss of approximately 100 million euros in 2023,” including the “positive impact of the two Yeezy declines in the second and third quarters of approximately 300 million euros and the possible write-down of the remaining Yeezy”. Inventory now amounts to around 300 million euros and one-off costs in connection with the strategic review of up to 200 million euros.”
An operating loss of 450 million euros had previously been forecast.
Pedestrians pass the entrance to a large Adidas store in Frankfurt. (Fox News / Fox News)
Adidas now also expects that “currency-adjusted sales will decline in the low single-digit range in 2023 (previously: decline in the mid-single-digit range)”.
In the third quarter, the sportswear company generated sales of 6.42 billion US dollars (5.999 billion euros).
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Several other companies, such as Gap and Balenciaga, parted ways with Ye around the same time as Adidas last year.