Months After Cutting Ties With Ye, Adidas Still Has A Yeezy ProblemWithout a solution, the inventory could cost the company more than $1 billion. Jonathan Leibson/Getty Images for ADIDAS
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It was the business breakup heard ‘round the world last year when Adidas severed its relationship with Ye, the designer of its once-coveted brand of Yeezy sneakers.
After the rapper-turned-mogul-turned-pariah went on an antisemitic tirade, Adidas finally decided enough was enough. But the athletic brand didn’t know what to do with all the Yeezy merchandise left in its warehouses.
A huge stockpile
According to reports, Adidas currently has inventory valued at a staggering $1.3 billion. Even six months after kicking Ye to the curb, however, the company is apparently no closer to unloading the merchandise.
Executive Bjorn Gulden confirmed that the negative press surrounding its ties to the controversial entertainer has taken a toll on the brand’s bottom line. In North America, where Yeezy products were primarily marketed, sales took a 20% dive over the span of just one quarter.
No good options
Gulden was frank about the situation during a recent earnings call, predicting a $552 million dip in profits due to the Yeezy fiasco. The negative financial impact will only become more severe if Adidas doesn’t figure out some way to unload the culturally toxic inventory.
In response to a question from one analyst during the March conference call, Gulden laid out the options the company has — but none of them is exactly a clear winner.
He said Adidas “could sell the product at cost” or “sell it with a small margin and give the margin away for different donations,” asserting: “The goal that we have is to do what the probability is that it damages us the least and that we do something good.”
Although Gulden said the company has received roughly 500 proposals from other businesses, he concluded that those options would “not necessarily be the right thing” for the brand.