Adidas boss has admitted the sportswear company’s broken partnership with Kanye West and his Yeezy brand is “damaging” business.
Bjørn Gulden said the loss of Yeezy “naturally hurts us,” particularly sales in North America, which suffered a 20 percent loss. The Yeezy loss reduced sales by €400m (£350m) in the first quarter of 2023.
BBC News reports that total revenue fell by 1 per cent overall.
It follows that Adidas cut ties with West after he made a series of remarks last year that were seen as anti-Semitic. West initially dismissed outrage over his comments, saying he didn’t believe the concept of anti-Semitism was “factual,” but later offered some sort of apology, including for his inflammatory comments about George Floyd.
Kanye West in November 2022. Credit: MEGA/GC Images
West, who has run successful businesses alongside his rap career, used to design sneakers for Adidas under his Yeezy brand.
Despite Adidas’ reported sales decline, the BBC added that the numbers were better than analysts had expected. Additionally, Adidas said sales were up 9 percent excluding the impact of the Yeezy deal.
At the time of West’s anti-Semitic remarks, the company said, “Adidas does not condone anti-Semitism or any other type of hate speech.”
Adidas said if it decided not to “repurpose” its remaining unsold Yeezy shares, it would hurt operating profit by 500 million euros (£443.4 million) this year. The company has yet to decide what to do with the remaining products: whether to sell them or scrap them.
Elsewhere, the BBC reports that Adidas is being sued by investors who claim the brand knew of West’s problematic behavior years before their partnership ended. Investors have claimed Adidas failed to limit financial losses and take precautions to minimize their exposure.
In response, Adidas said it rejects “these unsubstantiated claims” and added that it will “take all necessary measures to vigorously defend us against them”.
Despite the fall in overall sales in the first quarter of 2023, Adidas reported a better-than-expected operating profit of 60 million euros (£53.2 million). There was strong demand for his football, running and tennis shoes.
West, meanwhile, has reportedly opened a new Yeezy office in Los Angeles next to an Adidas building.