- Value of Yeezy shoes has rocketed since Adidas halted production
- Company sitting on €1.2bn worth of stock
- Discontinued products cut Adidas sales by €400m in Q1
Sportswear giant Adidas has decided to sell products from its ‘Yeezy’ collaboration with US rapper Kanye West and donate some of the proceeds to charity.
The German company ended its collaboration with West, now known as Ye, last October in the wake of the 45-year-old making antisemitic comments. The Yeezy line was put on hold before Adidas terminated the partnership following an internal review.
Yeezy shoes have become hugely popular in the resale market since Adidas stopped producing them and with millions of pairs still in storage, which have a retail value of €1.2 billion (US$1.3 billion), the company has confirmed some merchandise will be available to buy.
Adidas chief executive Bjørn Gulden said the firm was still deciding how the sales would happen, adding that it had chosen to go down this route, rather than donate products, because they would still reach the market indirectly.
“What we are trying to do now over time is to sell some of this merchandise … burning the goods would not be a solution,” said Gulden.
What was initially a huge revenue generator for Adidas has now turned into a major headache for the company.
The discontinuation of the Yeezy line has cost Adidas €400 million (US$436 million) in sales for the first quarter of 2023, while the move is projected to negatively impact operating profit for the year by around €500 million (US$545 million).
Gulden has admitted the termination was “of course hurting us”. The sportswear firm is also facing a class-action lawsuit from investors, who allege the company knew about West’s controversial remarks and behaviour years before it scrapped the partnership.
Selling Yeezy products will reduce losses, while charity donations will help with tax payments, though it remains unclear how much stock will be sold and what chunk of the proceeds will be donated to good causes. West is also entitled to some of the money.
Ultimately, Adidas hopes this decision can close the door on the Yeezy issue and restore some goodwill towards the company in the process as it navigates what Gulden has described as a “transition year”.