Adidas has released information that estimates the company could lose over one billion dollars after parting ways with Ye aka Kanye West, citing issues with moving previously manufactured stock as a cause.
On Thursday (Feb. 9), the athletic brand released a statement on its website concerning its estimated financial outlook for this year. It opened by addressing the company’s decision to end its partnership with the rapper last October, stating that it could lose $1.3 billion due to being unable to move the rapper and designer’s Yeezy clothing and footwear.
“The numbers speak for themselves. We are currently not performing the way we should,” said adidas CEO Bjørn Gulden in the statement. “2023 will be a year of transition to set the base to again be a growing and profitable company.” The full report discloses that $534 million alone could be lost in operating costs for the year and “accounts for the significant adverse impact from not selling the existing stock.”
Adidas had previously expressed plans to sell the remaining Yeezy sneakers under its own name at a discount, which would save them $300 million in marketing fees and royalty payments. That option does come with some challenges. “All of this work is extremely labor intensive and it can only be done one shoe at a time,” said Matt Powell, a footwear retail expert. “So, it’s very costly to go through this process.” Destroying the goods is another option, but industry experts have advised against such a move.
The news comes after the company decided to sever its ties with Ye after the “Father Stretch My Hands” rapper made a series of antisemitic remarks in interviews and online. Initially putting the “partnership under review” after Ye wore a “White Lives Matter” t-shirt. Adidas made the decision to drop him after he appeared on the Drink Champs podcast and said, “I can say antisemitic s*** and adidas cannot drop me.” It follows behind the news that their IVY PARK collaboration with Beyoncé failed to match sales expectations last year, with sales dropping by 50%, according to reports.