Adidas has finally zeroed in on a solution to manage the $1.3 billion, or 1.2 billion euros, worth of Yeezy product it has been sitting on since the company split from brand founder Kanye West and ended its Yeezy business in October.
After weighing a variety of options, chief executive officer Bjørn Gulden told investors at the company’s annual meeting on Thursday that Adidas would start selling Yeezy products and donate the proceeds to charity. Gulden, who spoke in German, said the proceeds would go to organizations representing people who “were hurt” by Kanye West’s comments and behaviors, according to a translation. Adidas plans to sell individual parts of the Yeezy inventory as well, though not all the details have been worked out yet.
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Adidas parted with West after he made repeated antisemitic statements. Since then, the company has grappled with sales declines. In the fourth quarter, the German sportswear company’s revenues fell 1 percent in currency neutral terms to 5.2 billion euros, reflecting a negative impact of around 600 million euros related to the loss of the Yeezy business. And last week, Adidas reported a revenue decline of 1 percent to 5.27 billion euros. Gulden said Adidas’ first-quarter sales growth would have been 9 percent if not for the Yeezy problem.
In a call with analysts last quarter, Gulden was candid about the potential options that have come to the table regarding the Yeezy issue. He said selling the products as they are could potentially help lift sales, but would also carry a “reputational risk” for Adidas. (Adidas previously indicated it might rebrand and sell existing Yeezy product to help mitigate losses.)
“That’s one extreme,” Gulden said. “The other side is to say we burn it or we do whatever it takes to destroy it and it disappears, then you have another issue,” he said, explaining how that move would anger people who see destroying the products as a “sustainability issue.” He also floated the idea of selling them and donating the proceeds to charity or simply donating all the unsold shoes to charity.
In the conversation with investors, Gulden did not name specific charities. It was also unclear if all the proceeds or just a portion would be donated.
In other Adidas news, the company and its longtime collaborator Yohji Yamamoto are partnering on a collection of performance running gear for the first time. Intended as the first in an ongoing series, the Y-3 collection is intended to bring an avant-garde aesthetic to the category. As Yamamoto described it: “The sports world and its technology seek for necessity, practicality or functionality while fashion is seeking the opposite. Y-3 is a strong examination of the blend of sport and style and the tension caused by mixing tradition with all that is modern.”
The line will launch with four footwear styles: the Y-3 Boston 11, the Takumi Sen 9, the Ultraboost Light and the Runner 4D FWD, all of which feature Adidas’s signature three stripes and Yamamoto detailing.
The line will debut on Friday on the Adidas website as well as at select retailers. Apparel, accessories and other footwear models will launch throughout the season.
— With contributions from Jean E. Palmieri
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