The renowned international sports brand, Adidas is expected to lose approximately $1.3 billion for choosing to cut ties with foremost American entertainment polymath, Kanye West.
It would be recalled that in 2022, Kanye West lost several of his major endorsement deals following his anti-Semitic comments. Adidas was among the organizations that ended their partnership with the award winning rapper and music producer.
In a statement, Adidas said its financial guidance for 2023 “accounts for the significant adverse impact from not selling the existing stock.” If the company can’t “repurpose” any of the remaining Ye clothing, Adidas said that could cost the company $534 million (500 million euro) in operating profit this year.
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The company said shortly after the partnership was dissolved that it would try to sell the clothing, stripped of the Yeezy name and branding. Adidas said selling the sneakers under its own branding would save the company about $300 million in royalty payments and marketing fees.
Despite that attempt, Adidas is going to have problems repurposing his clothing, an analyst previously told CNN.
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“There really are no good options for this distressed brand that sat somewhere between prestige and luxury,” said Burt Flickinger, retail expert and managing director at retail consultancy Strategic Resource Group.
Adidas said it also expects “one-off costs” of $213 million (200 million euro) because of a “strategic review” the company is currently undergoing.
“The numbers speak for themselves. We are currently not performing the way we should,” said Adidas CEO Bjørn Gulden in a statement. He was named the company’s top leader in January and joined from rival Puma.
The sports brand said last year that it ended its partnership with Ye because it “does not tolerate antisemitism and any other sort of hate speech” and said his comments were “unacceptable, hateful and dangerous.” Adidas said they violated the company’s “values of diversity and inclusion, mutual respect and fairness.”
