Adidas has finally zeroed in 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, CEO Bjørn Gulden told investors at the company’s annual meeting last week that Adidas would start selling Yeezy products and donate the proceeds to organizations representing people who “were hurt” by Kanye West’s comments and behaviors,
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Now, Adidas confirmed it will start selling Yeezy products by the end of this month via Adidas’ website and its Confirmed app. According to the company “a significant amount” of the proceeds with be donated to organizations that work to combat discrimination, racism and antisemitism. Adidas confirmed it will be donating to the Anti-Defamation League (ADL) and the Philonise & Keeta Floyd Institute for Social Change with the potential to partner with more groups.
The designs for sale will be those created in 2022 meant to go on sale in 2023 with the possibility for additional releases of other products in the future.
“Selling and donating was the preferred option among all organizations and stakeholders we spoke to,” Gulden said in a statement. “We believe this is the best solution as it respects the created designs and produced shoes, it works for our people, resolves an inventory problem, and will have a positive impact in our communities.”
“At a time when antisemitism has reached historic levels in the U.S. and is rising globally, we appreciate how Adidas turned a negative situation into a very positive outcome,” said ADL CEO Jonathan A. Greenblatt.
Adidas parted with West in last year in light of repeated antisemitic statements. Since then, the company has grappled with debilitating sales losses. In Q4, the German sportswear company’s revenues fell 1% in currency neutral terms to 5.2 billion euros, reflecting a negative impact of around 600 million euro related to the loss of the Yeezy business. And earlier this month, Adidas reported a revenue decline of 1 percent to 5.27 billion euros. Gulden said Adidas’ Q1 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, which parted with Ye in light of repeated antisemitic statements. (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 this move would anger people who see destroying the products as a “sustainability issue.” At the time, he also floated the idea of selling them and donating the proceeds to charity or simply donating all the unsold shoes to charity.