Adidas warns unsold Yeezy inventory could wipe out profit

Adidas warns unsold Yeezy inventory could wipe out profit for the first time in three decades, sending shares plummeting 12%: Sportswear giant cut ties with Kanye West after his antisemitic rants

  • Adidas is facing a financial headache following its breakup with Kanye West 
  • The rapper’s Yeezy line once brought in billions but has been ripped from stores
  • West saw his billion-dollar empire collapse after making anti-Semitic remarks

Adidas has warned its unsold Yeezy stockpile could wipe out profits for the first time in three decades amid its breakup with Kanye West following his anti-Semitic rants. 

The retail giant’s shares plummeted over 12 percent on Friday after the company admitted it could lose hundreds of millions due to its unsellable inventory of the rapper’s products. 

Just by not selling the stock, revenues for the German brand would take a 1.2 billion euro hit this year, while operating profit would fall by roughly 500 million euros as the company struggles to break even. 

‘The numbers speak for themselves. We are currently not performing the way we should,’ said CEO Bjorn Gulden, who joined Adidas on January 1 after switching from rival Puma. 

The company’s financial headache erupted after West shocked the world with a series of anti-Semitic rants in recent months. 

Numerous companies have severed ties with Kanye West after he went on a series of antisemitic rants  

Adidas has warned it is facing a dire financial situation related to its unsold stockpile of West’s ‘Yeezy’ shoe collection


Adidas CEO Bjorn Gulden admitted ‘the numbers speak for themselves’ amid the company’s financial turmoil

Price tags for Yeezy sneakers can go for up to $700 a pair, leading the company to face a $750 million loss this year as it considers writing off its entire stock. 

Amid the financial turmoil caused by the rapper’s outbursts, which saw Adidas sever its ties with the rapper in October, the retail giant is conducting an urgent review to find an exit ramp and save its bottom-line. 

One option being floated to salvage its warehouse inventory is to repurpose the stock under a different brand. 

Adidas’ decision to end its lucrative deal with West brought a swift end to sales of his shoes and apparel line, a pact that once brought in billions for the company.

Despite cutting ties with the rapper and fashion designer, the company’s issues stem from its inability to shift large stockpiles of his previously-popular products. 

Following Adidas’ decision to cut ties with West in October, owners of his Yeezy shoes raced to get rid of his shoes, with searches for the term ‘sell Yeezy’ skyrocketing almost 600 percent overnight. 

And the fallout has continued to hit the German athletic brand, leading it to issue its fourth profit warning in the last six months.  

The embattled company’s new boss has promised a ‘year of transition’ within Adidas to make the sportswear giant profitable again.  

The breakup with West came just before the crucial pre-Christmas sales period, forcing Adidas to halve its 2022 profit outlook in early November to 250 million euros – and highlighted the risks some brands have taken by tying their fortunes to celebrities.

Adidas had previously lowered its 2022 forecasts in October to mid-single digit percentage revenue growth in light of weaker demand in China and Western markets.

The company also suffered losses due to one-off expenses related to its exit from Russia following its invasion of Ukraine – but recent results showed the company had fared even worse than expected. 

Adidas publicly parted ways with West in October 2022

Forbes determined that West is now only worth $400 million after losing his deals with Adidas and other companies, down from his height of $2 billion

‘2023 will be a year of transition to set the base to again be a growing and profitable company,’ Gulden said Thursday, adding the company would focus on creating ‘brand heat’.

‘We need to put the pieces back together again, but I am convinced that over time we will make Adidas shine again. But we need some time.’

Gulden’s former company and Adidas rival Puma also reported it had lost ground on Friday, as its 5 percent share price drop indicates the challenges currently faced by numerous companies amid high inflation worldwide. 

UBS analysts said in a note to investors they expected the Yeezy business to be scrapped entirely given the tone of Gulden’s comments – and that it would be a long slog for the new boss.

‘While we think CEO Bjørn Gulden is the right person to turn around the brand, we don’t expect initial signs until 2H24,’ the note said.

Kanye West’s offensive behavior in recent months has caused severe financial turmoil for himself and his business deals

The rapper lost his billionaire status last year after facing severe backlash for a series of anti-Semitic rants. 

As well as being dropped by Adidas, West also saw his $220 million annual deal with GAP terminated and his Yeezy line ripped from its stores. 

The 45-year-old shocked the world last year following a string of bizarre behavior, including introducing a series of shirts to his fashion line with ‘White Lives Matter’ at Paris Fashion Week.

He again offended his former fans during an appearance on popular podcast Drink Champs, when he claimed that George Floyd died from a fentanyl overdose and that Derek Chauvin’s knee ‘wasn’t even on his neck like that’.

Kanye also made the incorrect claim that he is the ‘richest black man in American history’ – a title that belongs to Vista Equity’s Robert F. Smith.

The rapper, who has since had his social media accounts restricted, posted a shocking tweet in October where he vowed to ‘go death con 3 on Jewish people’.

West added that he ‘actually can’t be anti-Semitic because black people are actually Jew also.’ 

West’s offensive remarks led numerous businesses associated with him to publicly drop their deals with the rapper. 

Despite the financial disaster hitting Adidas’ books in the wake of the controversy, experts initially believed the resale market for Yeezy’s will explode because they will not be produced in mass quantities anymore.

Adidas, whose founder Adi Dassler belonged to the Nazi Party, found themselves coming under increasing pressure to drop Kanye after his anti-Semitic comments. 

Anticipation over the breakup led some to believe companies would want to cling onto their stock to re-sell the once-popular shoe once Adidas parted ways with West. 

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