Writing off Yeezy stock will cost over €1 billion, Adidas says

Adidas could take a €1.2 billion revenue hit should it decide to write off the stock of its collaboration with disgraced rapper Kanye West.

West, who now goes by the moniker ‘Ye’, made a series of media appearances in 2020 where he repeated far-right antisemitic talking points and praised the historic fascist dictator Adolf Hitler. His media appearances, along with his social media activity, led the rapper and fashion designer to be dropped by brands including Gap, Balenciaga, JP Morgan Chase, Christie's and even Madame Tussauds in London where his wax figure was 'retired'.

Adidas was one of West’s biggest collaborators, where his Yeezy range of clothing was one of its most noteworthy brands. At the time, the company said that West’s comments were “unacceptable, hateful and dangerous, and they violated the company’s values of diversity and inclusion, mutual respect and fairness”.

Addressing the situation on Friday, Adidas said that ending the partnership with West will hit operating profits by €500 million in 2023. The company said that scrapping all the stock would lead to a further €500 million hit to operating profits, with the company mulling whether it should repurpose any of the products for sale.

Overall, Adidas’ 2022 operating profits fell to €669 million, down two-thirds from €2 billion in 2021. This came as a result of the overall worsening financial landscape and tight Covid restrictions in China, along with the company’s decision to pull its business out of Russia.

Bjørn Gulden, the chief executive of Adidas who joined from Puma in November 2022, said: “The numbers speak for themselves. We are currently not performing the way we should. 2023 will be a year of transition to set the base to again be a growing and profitable company.”

“We need to put the pieces back together again but I am convinced that over time we will make Adidas shine again. But we need some time.”

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