Adidas’ quarterly figures are bad. The company has ended its collaboration with rapper Kanye West after he made repeated anti-Semitic remarks.
The profitable clothing and sneaker collections once ran under the name “Yeezy” and caused a sensation in the fashion world.
The fashion group is now faced with the big question of what to do with the remaining stock from the collection. At the Annual General Meeting, CEO Gulden outlined a possible solution.
Adidas-Boss Björn Gulden used to be at Puma worked. At his old employer, he looked at the Adidas business with “big eyes”, more precisely at the “Yeezy” cooperation with the rapper Kanye West, the manager from Norway recently revealed. The company sold various lifestyle products under the name “Yeezy”, and the cooperation was extremely profitable for both sides.
Now Gulden is with Adidas himself and should look at the cooperation with slightly different eyes: The company has parted ways with him after the rapper made anti-Semitic comments – a decision that has a major impact on the business. According to the company, the loss of “Yeezy” is expected to result in a loss of sales of 1.2 billion euros.
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Quarterly numbers are bad
The German sporting goods manufacturer has the first quarter ended with a loss of 24 million euros. For comparison: In the same period of the previous year, the company had still made a profit of 310 million euros.
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One reason for the slide into the red: the termination of the cooperation with West. The shoes in the collection were the main reason for the success of “Yeezy”. West’s designs made Adidas to become a major player in the Sneaker–World. As the “business week“ writes, the sub-label is considered one of the most successful in history, comparable only to the Nike collaboration with Michael Jordan.
Financial losses or image damage: what to do with the remaining stocks?
After breaking with West because of his anti-Semitic statements, business also collapsed. Adidas writes that in North America alone, 20 percent of sales fell away in the first quarter. Of these, 15 percent are accounted for by the “Yeezy” products. In addition, the group faces the big question of what to do with the inventories worth 500 million euros.
There are not many attractive alternatives. If the shoes are destroyed, Adidas’ image as a sustainable brand is at stake. West gets a commission on a sale, something the company wants to rule out. If the products are given away, it can be assumed that they will be sold on the black market and that Adidas will still have to bear the losses. A redesign, for example by overstitching or changing the logo, according to “business week‘ also ruled out. The magazine quotes Adidas CEO Gulden as saying: “If we sell it, we sell it like it is”.
At the general meeting on Thursday, CEO Gulden once again commented on the shoes. “It wouldn’t make sense to burn them,” said Gulden. A sale with subsequent donations of the proceeds to those affected by the musician’s statements seems conceivable. However, a final decision has not yet been made.
Regardless of what Adidas does with the inventory, the case highlights the difficulties in managing problem artists and their work. Perhaps the Annual General Meeting will provide answers.
With material from the dpa/dead