Adidas has revealed its plan to sell the remaining stocks of Yeezy shoes from its terminated collaboration with Kanye West for a much lower price this year.
According to BBC, the German sportswear giant severed ties with the rapper, also known as Ye, in 2022 following his controversial antisemitic remarks on social media.
Adidas-Kanye West Yeezy Shoes
The demand for Kanye West's Yeezy shoes made by Adidas has yet to fade. They remain popular in the resale market.
In a statement released on Wednesday, Adidas said the discontinuation of the Yeezy sneakers and significantly lowering the prices for wholesalers to reduce inventory stockpiles negatively affected the company's finances last year.
The company noted that it was also hit by the devaluation of the Argentine peso last December. Adidas is the maker of Argentina's national football team's shirts.
Despite facing significant challenges, the athletic apparel company announced an operating profit of €268 million in 2023, down from €669 million in 2022. However, Adidas said it expects to almost double the 2023 figure this year.
According to the company, its revenue and operating profit last year still exceeded company guidance after a better-than-expected performance in the fourth quarter and its choice not to write off most of its Yeezy stocks.
"The improvement is due to the better operating business of around €100 million and the decision to not write off €268 million of Yeezy inventory," Adidas CEO Bjørn Gulden said in the statement.
"Our consumer, retail and trade research has shown that we can sell this remaining inventory in 2024 for at least the cost price. This is why we have only written off inventory that was either damaged or very broken in sizes," he added.
Gulden, who started at Adidas early last year, was from the rival sportswear company, Puma. He was brought in to help the company recover after breaking up with Kanye West's Yeezy brand that left Adidas with €1.2 billion worth of unsold shoes.
Adidas Still Sell Some of Its Yeezy Stock Last Year
Adidas noted that the company sold some of its Yeezy stock last year, but net sales were around €450 million lower than in 2022.
The company now said it planned to sell its remaining Yeezy stock for "at least" the cost of producing the items as Adidas tries to regain losses from the partnership.
However, Adidas' latest outlook still included a possible write-off of its remaining Yeezy stock that would cost the company €300 million.
"Despite no assumed profit contribution from Yeezy, the strong unfavorable currency effects, the ongoing challenges in North America, our continued investment in both marketing and sales, and a world full of uncertainties, we expect an operating profit of around € 500 million in 2024," Gulden said.
"This year is the next building block needed to bring Adidas back to be a company with double-digit growth and 10% operating margin," he added.
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