Adidas warned that following its separation from rapper Ye (previously known as Kanye West), it may have to write off the 300 million euros ($320 million) in unsold Yeezy shoes. In order to increase donations to organizations that combat antisemitism, the company will determine in the upcoming weeks whether or not to issue the shoes a third time the following year.
Adidas, a shoe and sportswear business, severed its relationship with Ye in October 2022 following his antisemitic rants on the internet. This year, the company sold 750 million euros worth of shoes through its website and smartphone apps. The Philonise & Keeta Floyd Institute for Social Change and the Anti-Defamation League received a portion of the revenues.
The firm reduced its projected loss to 100 million euros from a previous estimate of 450 million euros by factoring in the potential write-off of the remaining Yeezy inventory in its financial outlook released on Wednesday. This was made possible in part by the company’s earlier two Yeezy shoe releases. Leading the attempt to bounce back from the loss of the lucrative Yeezy company is CEO Bjorn Gulden, who assumed the role following the Yeezy split.
Adidas’ declaration coincides with an increase in islamophobia and antisemitism following the start of the Israel-Hamas conflict. Several of the company’s more than 600 employees in Israel were called up for military duty, Gulden said, citing the “awful circumstances” in the Middle East. “We, as a company, are starting donation programs, for whole area, also for Gaza.
Gulden informed reporters on a conference call that the prognosis assumes that the remaining Yeezy inventory “will be written off…if that will happen or not is something that we evaluate all the time, so there are no decisions on what we’ll do.” That is currently the worst-case scenario financially, and it is a possibility. At the moment, no decision has been made.
“Of course, we hope to be able to do more drops next year and to get more value out of it and donate the proceeds, but right now we haven’t made a decision financially, which is why the outlook is as it is,” he continued.
The shoes were kept in several different locations, according to him, and there were “many scenarios.” He wouldn’t specify what would happen to the shoes if they weren’t sold by the company.
Following the split with Ye, the Herzogenaurach, Germany-based company was left with 1.2 billion euros worth of unsold Yeezys and was looking for a responsible way to get rid of them. Given their high market worth, giving the shoes away to those in need would have raised questions about informal resales, and restitching them to remove the brand identification would have been dishonest, according to the business.