Adidas estimates that it will lose $1.3 billion (1.2 billion euros) in revenue this year due to its inability to sell the designer’s Yeezy shoes and clothing. Due to his antisemitic remarks, Adidas ended its nine-year partnership with the rapper in October 2022.
Adidas stated in a statement that its financial projections for the year 2023 “account for the significant adverse impact of not selling the existing stock.” Adidas says the company’s inability to “repurpose” any of the remaining Ye clothing could result in a loss of $534 million (500 million euros) in operating profit this year.
Shortly after the partnership was ended, the company said it would try to sell the clothes without the Yeezy logo and name. According to Adidas, the company would save approximately $300 million in royalty payments and marketing fees by selling the sneakers under its own brand.
An analyst predicts that, Adidas will have difficulty repurposing his clothing in spite of that attempt. According to the The German sports apparel manufacturer, the Yeezy clothing that hasn’t been sold can only be destroyed or donated. However, Kanye West’s shoe designs will continue to be sold by the company without the Yeezy moniker.
Adidas said it also expects “one-off costs” of $213 million (200 million euro) because of a “strategic review” the company is currently undergoing.
“The numbers speak for themselves. We are currently not performing the way we should,” said Adidas CEO Bjørn Gulden in a statement. He was named the company’s top leader in January and joined from rival Puma.
Adidas stated last year that it had terminated its partnership with Ye because it “does not tolerate antisemitism and any other type of hate speech” and that Ye’s remarks were “unacceptable, hateful, and dangerous.” He was accused of breaking Adidas’s “values of diversity and inclusion, mutual respect, and fairness.”
Following Ye’s public wearing of a “White Lives Matter” T-shirt in the fall, Adidas put the “partnership under review.” The term is categorized as a “hate slogan” by the Anti-Defamation League and is used by White supremacist organizations like the Ku Klux Klan. Also, he said:
“I can say antisemitic s*** and Adidas cannot drop me,” during a tirade against Jews on a podcast.
This week, Adidas reported that the once-fashionable streetwear brand’s sales decreased by 50% to approximately $40 million last year, far below its internal projections of $250 million.
Meanwhile, Adidas shares (ADDDF) plunged approximately 11% in Frankfurt trading. Over the past year, Adidas (ADDDF) stock has fallen by 45 percent.
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