In the aftermath of various controversial incidents, Adidas decided to sever ties with Ye, the artist formerly known as Kanye West. This move led to the cessation of production of Ye’s Yeezy sneakers, posing new challenges for the brand.
Primarily, with the discontinuation of Yeezy sales, a once highly lucrative line for Adidas, the company is bracing for a substantial financial setback. Adidas recently disclosed that the discontinuation of Yeezy sales could result in a staggering loss of approximately $1.28 billion in annual revenue. Upon this revelation, Adidas shares plummeted by about 11% on Friday in response to the news.
Furthermore, even though Yeezy production has ceased, Adidas finds itself with a significant surplus of unsold Yeezys. Consequently, Adidas is exploring alternative strategies to liquidate these surplus shoes in a manner that might still generate some revenue. Currently, their proposed approaches include rebranding the shoes without the Yeezy label and selling them at discounted rates or targeting smaller markets abroad. As a last resort, donating the excess shoes to charitable causes, albeit not financially beneficial, could enhance the brand’s public image.
Adidas says dropping Kanye West could cost it more than $1 billion in sales https://t.co/CvxBrjcSD5
— CNN (@CNN) February 11, 2023
“There’s no elegant or profitable way out of this situation,” noted Matt Powell, a footwear retail specialist who has collaborated with Adidas, in an NPR interview. “The key question now is how they can mitigate the negative consequences that are inevitably going to unfold.”
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