(qlmbusinessnews.com Fri, 4th Aug, 2023) London, UK —
Adidas reports a resurgence in Yeezy sales, even after severing its partnership with Kanye West. The company intends to continue selling off its existing Yeezy inventory, which has significantly reduced the potential write-off cost from €500m (£430m) to €400m (£345m).
During the period from April to June this year, Adidas generated €400m (£345m) in revenue from Kanye West-designed footwear, matching the sales figures from the same period last year, despite the termination of the rapper's association.
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Last year, Adidas faced challenges when it disassociated itself from West following a series of antisemitic comments made by the artist, now known as Ye, across social media, TV, and radio. The conclusion of the partnership left a surplus of unsold Yeezy brand trainers.
However, on Thursday, the sportswear giant announced that it has managed to recoup losses by deciding to sell the remaining Yeezy stock produced in collaboration with Kanye West. The sale of Yeezys contributed approximately €150m (£129.4m) to the company's operating profit in the second quarter of this year.
Nevertheless, Adidas acknowledges that there remains a financial impact for the entire year. In the first three months of 2023, there were no Yeezy revenues, whereas during the same period the previous year, Yeezy sales amounted to about €400m (£345m).
For the first half of this year, revenue from Yeezy trainers totaled €400m (£345m), compared to €800m (£690m) during the first six months of last year.
As a result of the Yeezy sales and other efforts, Adidas now anticipates breaking even instead of making a profit for the entire year. The potential write-off cost for the Yeezys has been adjusted to €400m (£345m), down from the previously expected €500m (£430m).
Adidas has committed to donating some of the proceeds from the Yeezy sales to charity. However, the exact value of charitable contributions has not been disclosed.
Around €180m will be allocated to one-off costs associated with the strategic review initiated by Adidas, as well as additional donations and accruals for further contributions.
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Notable organisations such as the Anti-Defamation League, the Philonise & Keeta Floyd Institute for Social Change, and Robert Kraft's Foundation to Combat Antisemitism have been named as beneficiaries by Adidas.
CEO Bjørn Gulden affirmed that Adidas will continue to prudently sell off the remaining Yeezy inventory, expressing that this approach is more favorable than discarding the stock. It allows the company to make substantial donations to various organizations in need.
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