Adidas figures out what to do with all of its Yeezy shoes after Yeezy split
FRANKFURT, Germany (AP) Adidas still can’t decide how to dispose of €1.2 billion ($1.3 billion) worth of Yeezy shoes after splitting with the rapper formerly known as Kanye West, which led to a big loss for the German sportswear maker late last year years and expectations. more pain ahead.
CEO Bjorn Gulden said selling the popular shoe line would mean paying royalties to Ye, who was fired by Adidas five months ago after making anti-Semitic comments on social media and in an interview. During an earnings call on Wednesday, he pointed to the “many variables” of what to do with the shoes now piled up in warehouses.
Breaking them up could “raise sustainability issues,” though some companies have offered recycling solutions, said Gulden, who was named CEO after Ye’s outburst of remarks. Sewing them to hide the Yeezy branding so they can be sold “isn’t very fair, so it’s not an option,” he added.
Offers to distribute them to those in need in places like earthquake-hit Syria or Turkey would mean the product “will be back very quickly” due to its high market value, “so it’s not really an option,” he said. Goulden said.
If Adidas decides to sell the shoes, “I can promise you that the people who have been affected by this will also benefit in some way from this and will receive donations and proceeds in various forms, forms or forms,” the CEO said.
Adidas parted ways with Ye in October, following other brands that were under pressure to cut ties with the rapper over his anti-Semitic and other offensive remarks. The company is currently struggling to find ways to become profitable again and replace its Yeezy line, which analysts say accounted for up to 15% of its bottom line.
The breakup of Ye cost €600 million in lost sales in the last three months of 2022, resulting in a net loss of €513 million for the company. The decline, also linked to higher supply costs and lower revenues in China, contrasts with a profit of €213 million in the fourth quarter of 2021.
There could be even bigger losses as the company expects a €500 million drop in profits this year if it decides not to use the remaining Yeezy products in inventory. The company expects an operating loss in 2023 of 700 million euros.
Gulden said that “a lot of companies” were willing to buy the popular shoes, but that would mean paying royalties to Ye. However, rumors that the company was in talks to sell them “are not true.”
He heard from “a million people who have an opinion on this, and obviously when you sit inside, it looks a little different than outside.”
Gulden also said that Adidas is still investigating former employees’ allegations that Ye created a toxic work environment and that the sportswear company was aware of his problematic behavior and failed to protect workers.
The CEO called 2023 a “transitional year”, saying “we can start building a profitable business again in 2024.”
Last year, net sales in the fourth quarter increased by 1.3% to 5.21 billion euros compared to the same quarter last year. The company pointed to a 50% drop in revenue in China and higher shipping and shipping costs that could not be offset by higher prices.
For the full year, Herzogenaurach, Germany, said it posted a net profit of 638 million euros on sales, which rose 6 percent to 22.5 billion euros.
Adidas also shattered its lead further by replacing top sales and marketing executives. Head of Global Sales Roland Auschel will leave the company after 33 years and will be replaced by Arthur Hoeld, who currently leads the Europe, Middle East and Africa region.
Brian Grevy, head of global brands, will step down on March 31st. CEO Gulden will take over his product and marketing responsibilities.
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