Adidas plans to sell a portion of its discontinued Yeezy merchandise and contribute a fraction of the earnings to global organizations, CEO Bjoern Gulden’s said last Thursday.
Following the severance of ties with Kanye West last year due to his anti-Semitic remarks, the German sportswear powerhouse has been grappling with the Yeezy inventory, causing a decline in its stock value and negatively impacting its profits.
Yeezy brand shoes worth 1.2 billion euros ($1.3 billion) are presently in storage, awaiting their sale, which has been suspended. Due to adidas discontinuing their production, the shoes’ worth in the resale market has skyrocketed, with some models’ prices more than doubling.
In Fuerth, a town in southern Germany, CEO Bjoern Gulden addressed investors following the company’s initial annual loss in 31 years, stating that the timing and process of the intended sale of Yeezy merchandise were still being determined. Gulden expressed that burning the merchandise would not be a viable solution. Instead, the company plans to sell some of it while donating the profits to global organizations that Kanye West, who now goes by the name “Ye,” had harmed through his comments. Gulden stated that adidas had rejected the idea of donating the sneakers to prevent them from being indirectly sold in the market.
Ed Stoner, a sportswear industry consultant who previously worked at adidas, praised the decision as “smart and responsible,” stating that it maintains the brand’s integrity and prevents a sustainability crisis.
The sale of some Yeezy stock could potentially reduce the company’s projected $700 million loss this year. However, it is still unknown how much stock will be sold and what percentage of the profits will be donated to charity.
According to reports, if the merchandise is sold, Kanye West will be entitled to the previously agreed-upon commission of 15% of turnover, but adidas has not confirmed this. Gulden, however, defended adidas’ collaboration with the rapper, describing him as “perhaps the most creative mind in our industry” despite the challenges he presented.
Gulden admitted to envying adidas for their partnership with West when he was the CEO of Puma.
On Thursday, adidas’ chief financial officer Harm Ohlmeyer stated that their internal investigation into allegations of misconduct by Ye, including anti-Semitic comments, showing pornography, and harassing female employees, did not find any evidence to support the claims.
Nonetheless, Ohlmeyer acknowledged that Ye’s unpredictable and occasionally inappropriate behavior created a difficult work environment at adidas. He also mentioned that the company is taking steps to prevent similar problems from arising in the future.
According to Ohlmeyer, the lawsuit filed by adidas against Ye in a German arbitration court is still in its early stages and no specific amount of damages has been determined.
Adidas is expected to report a 4% decline in net sales to $5.07 billion in the first quarter, as per a consensus compiled by the company, with the results due to be announced on May 5, 2023.