Adidas in turmoil with £1.1BILLION of unsold stock… and they may have to ‘literally BURN £450m’ of Kanye West’s unsellable Yeezy range, which could see them report losses for first time in 30 years
- Adidas left with £1.1bn of unsold stock after reporting its annual results
- Company counting costs having cut ties with rapper once known as Kanye West
- But German sportswear brand is hoping to hit back with a profit growth by 2024
Adidas could be facing their first annual loss in 30 years after a failed tie-up with the rapper formerly known as Kanye West has left them with £1.1bn of unsold stock.
The German sportswear brand reported its annual financial results on Wednesday stating it will slash dividends to shareholders as they consider how to deal with the unsold ‘Yeezy’ products from the controversial rapper.
If they decide to write off the products it could lead to the company’s operating profit being lowered by £446million and a first annual loss for the first time in three decades.
According to the Washington Post, they could ‘literally burn £500m’ of the Yeezy range that was once a very popular and highly lucrative part of the sportswear’s business model.
However, Adidas CEO Bjorn Gulden hopes the company can return to profitable growth by 2024 by reducing stocks and cutting discounts.
Adidas CFO Harm Ohlmeyer and CEO Bjorn Gulden attend the company’s annual news conference in Herzogenaurach, Germany on Wednesday
A tie up with the rapper once known as Kanye West has left them with £1.1bn in unsold stock
In a statement Gulden added he is looking to put the ‘Yeezy’ fiasco behind the company and build the brand with a strategy that balances global direction with local needs, that is fast and agile.
The company’s decision to drop West capped the rapper’s fall from grace after a pattern of increasingly erratic behavior and anti-Semitic outbursts.
In October, he said in a social media post that he would go ‘death con 3 on Jewish people’, then doubled down in media interviews with comments that included vile remarks about Jewish people.
Burning or otherwise destroying the shoes would be the most extreme option – but it is something other fashion brands have done previously, albeit under different circumstances. Luxury brands like Louis Vuitton and Burberry have previously faced criticism for burning unsold stock to preserve brand value.
Adidas’ decision to end its lucrative deal with West brought a swift end to sales of his shoes and apparel line.
Adidas, which owns the rights to most of the Yeezy line, said after the partnership ended in October 2022 that it was ending production of ‘Yeezy branded products and [stopping] all payments to [West] and his companies’.
In November, the company suggested it would continue with the designs, but stripped of the Yeezy name and branding. The announcement prompted speculation the rapper could still be in line for some payments.
Following the 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 per cent overnight.
Adidas have a number of high profile deals elsewhere, including a formerly world record tie-up with Manchester United.
The sports brand have a world record £75million a year deal with Manchester United
The sportswear brand also have a £18million ‘lifetime’ boot deal with PSG star Lionel Messi
Adidas branding was seen globally as Argentina won the World Cup in Qatar last year
Premier League leaders Arsenal also have their kitwear supplied by the German company
The German supplier agreed a £750million 10-year-contract with the Old Trafford outfit, a world record deal back in 2015.
In addition, they also have a ‘lifetime contract’ with Lionel Messi worth £18m a year with the Paris Saint-Germain hitman back in 2017.
On field success appears to not to have aided results greatly despite being kit supplier to Argentina who won the World Cup in Qatar back in 2022.
As well as United, adidas also supply Arsenal with sportswear and the north London side are in a strong position to win the Premier League title this season.
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