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By cutting ties with Kanye "Ye" West and his YEEZY brand in October 2022, adidas undoubtedly made the right decision. This turbulent month saw Kanye dropped by everyone from Balenciaga to his touring agency after he claimed that LVMH CEO Bernard Arnault was to blame for the death of Virgil Abloh and debuted YEEZY Season 9 complete with the infamous "White Lives Matter" T-shirt.
Staying on the YEEZY train would have effectively guaranteed brand suicide in the eyes of the public; adidas had no other option.
Adidas must find a solution for the minor issue of $1.3 billion in unsold YEEZY products, even though it is likely that it will eventually reclaim its position among the elite of the sportswear industry sooner or later.
Adidas essentially has two options: sell the products or dispose of them, with the former now being reported as the likely result. However, this does not yet substantiate rumours that Kanye and Adidas will work together again.
Adidas is currently predicting an operating loss of $738 million for 2023, which would be the first loss the company has experienced in more than three decades.
Regardless of losses, the move to cut ties with Kanye seems to be regarded as the right move. Kanye reportedly continued wearing Nike shoes and Balenciaga boots rather than adidas sneakers, for example, and reportedly watched pornographic videos on his phone while attending adidas meetings aside from the mainstream controversy.
Money is, of course, the extenuating factor. Analysts estimated that Adidas made $2 billion in YEEZY sales annually, or close to 10% of its total income.
In a press release from February 10, adidas predicted that it would all change in 2024.
“The numbers speak for themselves. We are currently not performing the way we should”, said new adidas CEO Bjørn Gulden. “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.”
The announcement comes in the wake of reports that sales of Adidas and Beyonce's Ivy Park line have fallen more than 50% since 2021's $90 million haul, falling short of what adidas had anticipated.
It should be noted that an Ivy Park representative disputed the assertions, which suggest that the line's 2022 revenue was only $40 million, significantly less than adidas' anticipated $250 million.
There are currently rumours that Adidas is developing a line of house-made sneakers that are almost identical to YEEZY models. It closed down YEEZY SUPPLY, the specific YEEZY drop website, in the first quarter of 2023.
