Adidas is seeing positive results from its decision to start selling Yeezy products once again. But leadership at the German sportswear retailer said it has no plans to sell more Yeezy shoes when the current stockpile dissipates.
“To take [Kanye West’s] designs and sell them off later, which technically we could do, is not part of our strategy,” said Adidas CEO Bjørn Gulden in a call with analysts on Thursday. “Our task is to limit the damage, get rid of the inventory and then build the business later without Yeezy.”
When Adidas ended its Yeezy partnership with Kanye West in October, it confirmed that it was the sole owner of all design rights to existing products as well as previous and new colorways under the Yeezy partnership. This meant Adidas could technically rerelease designs from the archives or relaunch the designs in new colorways — without using the Yeezy name. Instead, Adidas has decided to sell out existing inventory and donate some of the proceeds to organizations supporting people who were hurt by Kanye West, who made a series of repeated antisemitic statements before the partnership ended.
Thus far, demand for the shoes has proven resilient. Adidas was initially left with leftover $1.3 billion, or 1.2 billion euros, worth of Yeezy product when the partnership ended. Last week, Adidas raised its full-year guidance, citing tailwinds from its first drop of the left-over Yeezy products in late May, which brought in around 400 million euros over the second quarter. Another large Yeezy drop is slated for this month.
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Adidas said that it accrued 100 million euros that will be used for donations. This second upcoming drop will have more lower-priced products, like the foam runner, and will be spread throughout the lower-margin wholesale channel, which means proceeds this time around could look different than the first drop. For this reason, Adidas declined to share specific projections about what future proceeds from Yeezy drops could look like.
Including the recent Yeezy sales, Adidas said it now expects loss related to Yeezy inventory to cost the company closer to 400 million euros, down from the previously outlined 500 million euros. Total one-off costs this year are still expected to total 200 million euros, as previously expected, which translates to a total projected operating loss of 450 million euros in 2023, down from the previously expected 700 million euros.
For 2023, Adidas now expects revenues to decline at a mid-single-digit rate, a boost from its prior guidance of declining at a high-single-digit rate.
