Adidas Plans To Sell Remaining Yeezys At Cost Amid Severe Profit Decline

Adidas continues to grapple with challenges stemming from its severed partnership with Kanye in October 2022, prompted by the rapper's anti-Semitic remarks.

Adidas faces ongoing hurdles following its separation from Kanye West in October 2022 due to the rapper’s anti-Semitic remarks, according to Fortune. Initially contemplating the disposal of the remaining Yeezy sneakers, the sportswear giant pivoted to selling them and vowed to donate the proceeds to charitable causes. In August 2023, plans surfaced to contribute €110 million ($119 million) from Yeezys sales to charities impacted by West’s statements.

Despite those efforts, by November Adidas found itself considering the possibility of writing off its entire $290 million worth of Yeezy inventory as a precautionary measure.

Now, the sportswear giant has declared its intention to sell the remaining Yeezy sneakers “at least at cost” in an effort to mitigate the financial impact of the terminated partnership. CEO Bjørn Gulden said, “Our consumer, retail, and trade research has shown that we can sell this remaining inventory in 2024 for at least the cost price. This is why we have only written off inventory that was either damaged or very broken in sizes.”

The decision to sell Yeezys at cost raises questions about potential profits and the impact on charitable donations. When questioned about Adidas’ plans for the funds generated from Yeezy sales in 2024, the company declined to comment. The assumption that the sneakers would be sold at cost has been factored into the operating profit estimate for the year, according to Adidas’ press release.

In preliminary results released Wednesday, Adidas reported a 60% decline in operating profit from 2022, reaching €268 million ($290 million) in 2023. Various factors, such as foreign exchange fluctuations and subdued demand for sports apparel, have contributed to the company’s performance struggles. Despite anticipating nearly doubling profits to €500 million for the current year, Adidas’ projection falls short of the average analyst estimate of €1.3 billion.

The Yeezy crisis represents a significant challenge for Adidas, as its collaboration with Kanye West, initially beneficial for the company’s bottom line, turned tumultuous after the rapper’s controversial comments. The fallout from the collaboration has led Adidas to reassess its strategy, with CEO Gulden overseeing changes within the company.