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Kanye Adidas deal loses more than $1 Billion in Revenue

Ye, previously Kanye West, and Adidas’ split was expensive.

The company issued a warning on Thursday, stating that it expects to lose $1.3 billion (1.2 billion euros) in revenue this year as a result of its inability to market the designer’s Yeezy clothes and footwear. Because of the rapper’s antisemitic comments, Adidas dissolved their nine-year collaboration with him last October.

Adidas claimed in a statement that their financial forecast for 2023 “accounts for the severe detrimental impact from not selling the existing stock.” Adidas warned that failing to “repurpose” any of the remaining Ye apparel could cost it this year’s operating profit of $534 million (500 million euros).

Following the dissolution of the collaboration, the business said that it will attempt to sell the items without the Yeezy name and branding. According to Adidas, the business would save $300 million by selling the footwear under its own brand rather than through licensing and marketing expenses.

Analyst predicts Adidas will struggle with clothes recycling despite his best efforts.

Burt Flickinger, a retail specialist and managing director at retail consultant Strategic Resource Group, said there were “really no good solutions” for this distressed brand that sat in the middle of prestige and luxury.

You could even destroy it or give away any Yeezy gear that hasn’t sold.

At Laced Up, a sneaker consignment shop in Paramus, New Jersey, on Tuesday, October 25, 2022, a customer puts on a pair of Adidas Yeezy shoes. The musician formerly known as Kanye West has lost Adidas’ support due to his hateful and antisemitic comments.

Adidas is the latest brand to break up relations with Ye, and the German sportswear company predicted that this move would negatively affect its bottom line.

Despite dropping the Yeezy brand, Adidas will still sell Kanye West’s shoe designs.

A “strategic assessment” that the business is presently conducting, according to Adidas, will result in “one-off charges” of $213 million (200 million euros).

The statistics are self-evident. According to Adidas CEO Bjrn Gulden in a statement, we are not now doing as we should. After joining from competitor Puma, he was appointed the organization’s chief executive in January.

Adidas stated that it terminated its relationship with Ye last year because it “does not tolerate antisemitism and any other type of hate speech” and that his views were “unacceptable, vile, and dangerous.” They went against Adidas’ “values of diversity and inclusion, mutual respect, and fairness,” according to the sportswear brand.

Following Ye’s public wearing of a “White Lives Matter” T-shirt last fall, Adidas put the “relationship under review.” The statement is listed as a “hate slogan” by the Anti-Defamation League and is used by organizations that support White supremacy, such as the Ku Klux Klan.

During a tirade against Jews on a podcast, he also remarked, “I can scream antisemitic s*** and Adidas cannot drop me.”

Its Beyoncé-led Ivy Park brand may have some problems, but Adidas made no mention of them. This Monday, The Wall Street Journal revealed that the once-trendy streetwear brand’s sales dropped by 50% to approximately $40 million in the previous year, significantly undershooting its own internal estimates of $250 million. In response, Adidas informed the Journal that the alliance is “solid and profitable.”

In trading in Frankfurt, shares of Adidas (ADDDF) fell 11% or so. During the previous year, the price of Adidas (ADDDF) stock fell by 45%.

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