Sportswear maker Adidas says it is still pondering what to do with its massive inventory of Kanye West’s “Yeezy” items now that the company has severed ties with the controversial entertainer.
Adidas’ decision to end its association with controversial entertainer Kanye West – now officially known as “Ye” – is an expensive one.
Not selling its massive buildup of “Yeezy” shoes and other items, the company says, could lead to a revenue loss of 1.2 billion euros ($1.3 million0).
“Should the company irrevocably decide not to repurpose any of the existing Yeezy products going forward,” Adidas said, it would have to write it all off.
That, according to the company, would cut Adidas’ operating profit an additional 500 million euros in 2023.
Added to other costs, the write-off could give the manufacturer a 2023 operating loss of some 700 million euros.
New Adidas CEO Bjorn Gulden says this year will be used as a “transition” to build the base stronger in 2024 and 2025.
“We need to reduce inventories and lower discounts. We can then start to build a profitable business again in 2024,” Gulden said.
On March 8, Adidas reported that its 2022 net profit dropped 83% to 254 million euros, confirming the results reported in February.
The Adidas-Yeezy partnership came to an abrupt halt in October after the rapper made antisemitic remarks on Twitter. Adidas said it would take a $247 million hit to its profits as a result.
Several other companies dropped Yeezy products from their stores as a result of West’s comments, including Balenciaga, Gap, and Footlocker.
Last month Adidas announced it was investigating West, also known as Ye, following a Rolling Stone report that said he’d acted inappropriately around Yeezy staff.
It claimed that West showed workers explicit material of his ex-wife Kim Kardashian in a meeting, based on interviews with more than two dozen former Yeezy and Adidas staff.
The Rolling Stone report included claims by a former Yeezy worker that she witnessed Ye tell a young woman of color to sit on the floor during an hours-long meeting.
He allegedly told the designer that she didn’t “deserve to sit at the table.”Adidas did not immediately respond to a request for comment from Insider.
