Up to $1.2 billion (£1 billion) in income from unsold Yeezy stock will go to Adidas. After Kanye West made many anti-Semitic social media statements, the company broke its relationship with him in October. They had worked together to build the Yeezy clothing line.
Yeezy’s Stock Future
Since then, Yeezy’s Stock future has been somewhat certain. The business informed retailers to remove any current inventory from shelves and online stores and declared that it will not support any upcoming Yeezy stock drops. The Yeezysupply.com website, which Ye used to introduce his various Adidas Yeezy collaborations, restocks, clothing items, Balenciaga collaborations, GAP products, and more, was also quietly shut down last week.
How would the shoes fare, though? Adidas asserted that it holds all intellectual property (IP) patents and copyrights for the designs and hues and that it is free to delete branding while still selling the sneaker. Ye just takes the moniker “Yeezy” with him.
Following a string of remarks that became more unpredictable and discriminating, West, who has legally changed his name to Ye, appears to have effectively destroyed his career, at least in the mainstream.
Financial Outlook of Adidas
Adidas has also been greatly impacted by his fall from grace. The German apparel behemoth is still considering how to utilize its current Yeezy stock, but no matter what it decides, it risks losing hundreds of millions of dollars.
The business stated in a statement: “Adidas released its 2023 financial outlook today. This estimate already takes into account the major negative impact of not selling the current stock, even though the business is still examining options for the exploitation of its Yeezy inventory in the future.
“This would result in around €1.2 billion ($1.28 billion) less in revenue and €500 million ($534 million) less in operating profit this year. In light of this, Adidas anticipates a high-single-digit reduction in currency-neutral sales in 2023. …200 million euros ($215 million) in one-time expenses is what Adidas anticipates for 2023.
Bloomberg reports that Adidas is anticipating its first operating deficit in at least three decades, totaling €700 million ($752 million) for the year. The underlying operating profit of the corporation is close to breaking even.
The existing Yeezy stock inventory would be written down, which would reduce the business’s operating profit by an additional €500 million this year, should the company ultimately decide not to reuse any of the existing Yeezy stock moving ahead.
Additional failed collaborations
The most successful Adidas partnership may have been with Kanye West, but going back doesn’t seem like an option. Other celebrities must fill the void, which may be easier said than done.
Beyoncé appeared like a strong choice for cooperation as the artist who recently broke the previous record for the most Grammy awards earned. However, her diverse line of streetwear isn’t generating any Ye-like sales for Adidas. The Ivy Park line is proving to be more of a burden than a benefit: According to a recent Wall Street Journal story, its sales decreased by more than 50% to $40 million in 2022, a long cry from the $250 million Adidas predicted. The musician and brand currently have a contract in place that pays the former $20 million yearly and is to expire at the end of this year. It appears that Adidas leaders are thinking about changing or ending it.
While searching for a new hero collaboration to take Ye’s place, the company continues to collaborate with high-end labels like Gucci, Stella McCartney, and Prada. They are also collaborating with athletes like American professional skateboarder Dennis Busenitz to keep the shelves stocked with cutting-edge pieces, many of which have high price tags.
Optimistic Approach of CEO
Despite giving a very dismal appraisal of the situation, Adidas CEO Bjrn Gulden said he was still optimistic about the future.
“The data speaks for itself. Right now, we’re not performing as well as we could, ” he added.
“2023 will be a year of change to lay the groundwork for the business to once again be expanding and successful. The consumer, our athletes, our retail partners, and our Adidas employees will all receive our undivided attention.
“Together, we will focus on generating brand buzz, enhancing our product engine, providing greater distribution, and ensuring that Adidas is a fantastic workplace.
“Adidas has all the necessary components for success: a fantastic brand, fantastic people, fantastic partners, and a world-class infrastructure.
“We need to fit the puzzle pieces back together, but I am confident that with time, we will restore Adidas’ glory. Yet more time is required.
Jerry Lorenzo, the founder of Fear of God, switched from the swoosh brand Nike to the three stripes in December 2020, and Adidas formally confirmed their collaboration. But other than one yellow sweatshirt and Lorenzo distancing himself from an Adidas Basketball advertisement in December 2022, there hasn’t been much discussion about the much-awaited collaboration. But the brand and the designer anticipated “sharing more in the first half of 2023.” We hope that it will bring a better future for Adidas.