Adidas warehouses amassed $1.3bn in Yeezy shoes

The fate of 1.2 billion euros ($1.3 billion) worth of unsold Yeezy stock evaluated the German sportswear company as it tries to engineer a turnaround from the loss of its profitable sneaker line and the continued fallout of its former relationship with Ye.

chicken feet is “getting closer and closer to making a decision” on what to do with the sneakers and the “options are getting smaller,” new CEO Bjorn Gulden said in a conference call on Friday after reporting 400 million euros ($441 million) in lost sales at the start of the year.

But with “many interested parties” involved in discussions, no decision has yet been reached, he said.

Adidas is stuck with stacks of its flagship Yeezy brand shoes after ending its relationship with Ye in October over his antisemitic and other offensive comments on social media and in interviews.

Gulden, who became CEO in January after the Ye split, declined to say whether the destruction of shoes is gone but the company is “trying to avoid that.”

He previously said that other options have drawbacks: selling the sneakers means paying royalties to Ye, returning them to gain brand recognition would be dishonest, and giving them to the person in need may lead to resale due to high market value.

Gulden wouldn’t say how many pairs of Yeezy shoes Adidas is holding “because the consumer will know how many we have and that could have an impact on demand.”

Losing the Yeezy brand “of course hurts us,” Gulden said in a statement. the the breakup will reduce income by 500 million euros this year if Adidas decides not to sell the remaining Yeezy stock, the Herzogenaurach-based company said.

Net sales decreased 1% in the first quarter, to 5.27 billion euros, and should have increased by 9% in the Yeezy line, the company said. It reported a net loss of 24 million euros, a drop from a profit of 310 million euros in the same period a year ago.

Operating profit, which excludes certain items such as taxes, fell to 60 million euros from 437 million euros a year earlier.

Gulden said the results for Adidas were “a little better than we expected” as the company looks to restart growth and move beyond the Ye split. He called 2023 “a transition year” toward “a better ’24 and a good ’25.”

The company faces other problems tied to the rapper. Investors sued Adidas a week ago in the US, which said the company knew about Ye’s offensive words and hurtful behavior years before the breakup and failed to take precautions to limit losses to financial.

The lawsuit — which represents people who bought Adidas securities between May 3, 2018, and February 21, 2023 — points to 2018 comments in which Ye suggested slavery was a “choice” and reports Ye made of antisemitic statements in front of Adidas staff.

The company said last week that it rejected “these unfounded claims and will take all necessary steps to vigorously defend ourselves against them.”

The end of the partnership with Ye also cost Adidas 600 million euros in lost sales in the last three months of 2022, helping to push the company to a net loss of 513 million euros.

An operating loss of 700 million euros is possible this year, Adidas said, mostly because of the 500 million euro hit it would take if it didn’t sell the existing Yeezy shoes.



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