After severing its collaboration with the rapper last year, the sportswear company has $1.3 billion in unsold “Yeezy” goods in storage.
Adidas announced on Thursday that it would liquidate some of its remaining ‘Yeezy’ inventory created in partnership with Kanye West and contribute a portion of the earnings to organizations impacted by the rapper’s anti-Semitic remarks from the previous year.
At the company’s annual shareholder meeting on Thursday in Germany, Adidas CEO Bjorn Gulden warned investors, “Burning the goods is not the solution.” We are attempting to sell some of this goods and give the proceeds to the organizations that were harmed by Kanye’s words.
In October of last year, the company, which was established in Germany in 1949, terminated connections with West, who changed his name to Ye in 2021, after he made a number of abusive remarks on social media directed at the Jewish community. Due to the $1.3 billion in unsold product that Adidas had in storage as a result of this decision, the company announced its first yearly loss in 31 years in March.
Adidas stated in its financial update to investors earlier this month that the decision to cancel the West collaboration will result in a loss of operational income of more than $545 million in 2023. When the company issued its fourth profit warning since July 2022 in February, shares of the company fell by 10%.
These losses would be somewhat offset by sales of the Yeezy stock, although it is still unknown how much of the stock reserves will be sold and how much of the revenues will be given to charity. Investors were informed by Gulden on Thursday that “we are working on those things.”
In addition, the head of Adidas defended the company’s choice to work with West, saying that “as challenging as he was, he is perhaps the most creative mind in our industry.” He avoided commenting on media rumors that West would be entitled to 15% of all turnover because of a prior deal, which was reported.
The third-party resale market continues to see demand for shoes from the Adidas/West collaboration. According to Gulden, the company chose against giving the goods to charities because it anticipated that the items would eventually be auctioned on internet marketplaces.
Adidas was revealed to be being sued by a group of its investors last month. The investors contend that the company knew of West’s antisemitic tendencies but did nothing to restrict potential financial responsibilities.
