Adidas has revealed its plans to sell off the remaining stock of Yeezy sneakers from its terminated collaboration with Kanye West, at a minimum of the production cost. The sportswear giant cut ties with the rapper and fashion designer, also known as Ye, in 2022 after he made a series of antisemitic remarks on social media. However, the demand for Yeezy sneakers remains high, especially in the resale market, where they fetch premium prices.
Adidas ends Yeezy partnership, faces financial losses
The partnership between Adidas and Kanye West, which started in 2015, was one of the most successful and profitable collaborations in the history of the sportswear industry. The Yeezy sneakers, which were designed by West and produced by Adidas, generated approximately 1.3 billion dollars in revenue in 2022, making them one of Adidas’ most lucrative product lines.
However, the partnership came to an abrupt end in October 2022, when Adidas announced that it was severing ties with West, following his series of antisemitic comments on social media, which sparked outrage and backlash from the public and the industry. Adidas, along with other major brands, such as Nike, Gap, and Walmart, decided to distance themselves from West, and to stop selling or producing any products associated with him.
The termination of the partnership left Adidas with a huge inventory of unsold Yeezy sneakers, worth around 1.2 billion euros, which the company initially considered writing off. However, the company later decided to sell some of the remaining stock through online releases on its website and app, resulting in net sales of 750 million euros in 2023. The discontinuation of the partnership also reduced Adidas’ revenue by 450 million euros in 2023, compared to 2022.
Adidas to sell remaining Yeezy stock at production cost, recoup losses
Adidas has now announced that it plans to sell the remaining stock of Yeezy sneakers at a minimum of the production cost, in order to recover some of the losses from the previous profitable partnership. The company aims to sell the remaining Yeezy footwear inventory, valued at approximately 300 million euros, at a cost to generate around 250 million euros.
The company also warned that its profits would continue to be affected by the devaluation of the remaining Yeezy inventory, which could cost the company about 300 million euros in 2024. The company’s finances were also impacted by the currency fluctuations in Argentina, where the peso was devalued by more than 50% in December 2023.
Adidas said that it expected to see an improvement in its operating profit in 2024, due to the better operating business and the decision to not write off the remaining Yeezy inventory. The company also said that it was optimistic about the future, as it focused on its core brands and products, and invested in innovation and sustainability.
Yeezy sneakers remain popular, despite controversy
Despite the controversy and the breakup with Adidas, the Yeezy sneakers remain popular and sought-after among sneaker enthusiasts and collectors, who are willing to pay high prices for them in the resale market. According to StockX, a leading online marketplace for sneakers, the average resale price for Yeezy sneakers was 327 dollars in 2023, up from 312 dollars in 2022.
The Yeezy sneakers are known for their distinctive and innovative designs, which often feature neutral colors, chunky soles, and mesh or knit materials. The sneakers are also associated with the celebrity status and influence of Kanye West, who is regarded as one of the most influential figures in the music and fashion industry.
However, the popularity and value of the Yeezy sneakers may decline in the future, as the supply and demand dynamics change, and as the consumers’ preferences and tastes evolve. The Yeezy sneakers may also face competition from other brands and designers, who are offering similar or alternative products in the market.
