It’s a secret for no one since Kanye West was fired from Adidas after his scandalous remarks, Adidas isn’t doing well at all. More than that, they even recently asked Puma, their old and historical rival, for help. And It’s incredible because of the common history between Adidas and Puma. The two companies were both founded by two brothers who fought over the common brand they used to have: The Dassler Company. After they separated from each other, Adolf Dassler created Adidas and Rudolf Dassler created Puma.
After that, they started to fight over shoes and sponsorship, making it the most famous war in the history of sportswear. But this help from Puma is only a little part of the topic of the day since Adidas announced today that they lost 83% of profit in 2022 and that it’s going to be even worse in 2023 because of Kanye West’s departure from the brand. But even more terrible news, the brand could burn 500 Million dollars worth of Yeezys due to the end of their contract with the rapper.
Adidas’ Terrible Financial Results Of 2022
The problem with Kanye West, when you work with him, is that you always have to be prepared for the unexpected. You can never know what he can do or say in the future. And that’s why most of the brands know that it’s very risky to put all their financial strategy on him. That’s the main reason why Louis Vuitton decided to hire someone like Pharrell Williams who is maybe, less impactful than Kanye West in terms of hype, but more moderate and less risky in a public place.
And that’s why Bjorn Gulden, the new head of Adidas, wasn’t really happy during his annual conference in Herzogenaurach, Germany. Like every year, he revealed the financial results of the company and you guessed it, these are not good at all. For the first time in 30 years, Adidas is about to lose a lot of money because of the early ending of its collaboration with Kanye West. Because of that sudden ending, they find themselves with thousands of Yeezys they cannot sell, 1.2 Billion dollars worth of shoes to be precise.
And this event is something totally new in the history of fashion, nothing like this has ever happened before, so nobody knows how to get out of this situation. However, Adidas recently decided to sign a final contract with Kanye West in order to authorize the sale of the Yeezy stock. Kanye West approved that, and that’s how Yeezy is supposed to end. However, contrary to before and because of his antisemitic remarks, there’s a chance that not all the remaining products will be sold. And if It is the case, Adidas will have to do something terrible.
Burn All The Remaining Yeezys
You read that well, that’s the only solution if there are still Yeezys that aren’t sold at the end of their final contract with Kanye West. For now, Adidas made an estimation on what could be that remaining stock after the end of the contract, and they would have to burn $500 million worth of Yeezys out of the $1.2 Billion worth of Yeezys remaining. This means Adidas would have to burn practically half of the remaining stock at the end of the contract in the worst-case scenario where people would not want to buy Yeezys, even for a reduced price.
Concerning the pair themselves, many rumors say different things. One of them says that these shoes will be the same Yeezys with the same branding we always knew. Others say that the Yeezy branding will be removed from the shoes, making them worthless for many sneakers addicts who were only buying Yeezys because these were designed by Kanye West. We don’t know which rumor is true, but if the Yeezy branding is not on the shoes anymore, we understand that Adidas is worried about their sale, since these do not worth the same as before.
This “burning” operation seems extreme, but Adidas really thinks about it since they do not have other choices. Louis Vuitton and Burberry have already done that in the past to preserve the prestige of the brand, and they have been very criticized for it. Let’s see if Adidas will do the same or maybe give these Yeezys to people who need them, which could be something great coming from the sportswear company. But for now, the new head of Adidas announced that the brand will be profitable again in 2024. We don’t know how yet, but we can’t wait to see that.