Adidas’ Strategic Move: Selling remaining Yeezy Stock at Production cost Post-Kanye West Split
Adidas has devised a strategy to offload the remaining inventory of Yeezy sneakers from its terminated collaboration with Kanye West. The sportswear giant plans to sell these highly sought-after sneakers for at least their production cost, following the dissolution of its partnership with the rapper and designer, known as Ye, in 2022 due to controversial remarks.
Despite facing challenges, Adidas aims to recoup losses from the discontinued Yeezy line, which left the company with unsold inventory valued at around €1.2 billion.
The decision to sell the remaining stock at production cost aligns with Adidas’ effort to address the impact of currency fluctuations, which cost the company €1 billion last year.
Bjørn Gulden, Adidas’ CEO, highlighted the company’s improved operating business and the decision not to write off €268 million of Yeezy inventory as contributing factors to a 2023 operating profit of €268 million.
Gulden, appointed from rival Puma in 2023, seeks to drive Adidas’ turnaround post-Yeezy.
The company acknowledges the enduring demand for Yeezy sneakers in the resale market, despite the severed ties with Kanye West.
While the German brand posted an operating profit for 2023, it anticipates potential write-offs of around €300 million for the remaining Yeezy items.
Additionally, Adidas faced challenges from the devaluation of the Argentine Peso, impacting profits and prompting a cautionary outlook for the year ahead.
This strategic approach by Adidas reflects its commitment to adapt to changing market dynamics and recover from the financial implications of the discontinued Yeezy partnership.
