In a shocking turn of events, Adidas CEO Bjorn Gulden announced on Wednesday that the sportswear giant is considering writing off its remaining inventory of Yeezy merchandise, valued at a staggering $320 million (AU$500 million).
This comes as Adidas officially separates from the iconic brand designed by controversial rapper Kanye West, who lost his partnership with the company following a series of antisemitic remarks that sent shockwaves through the industry.
The Big Number: $374.7 million
Adidas had been raking in massive revenues from Yeezy sales, hitting a jaw-dropping $437 million in the second quarter alone.
Throughout the third quarter, Yeezy merchandise generated $374.7 million, showcasing the enduring popularity of the collaboration despite the scandal.
In the previous year, Adidas boasted an impressive $1.28 billion in revenue from Yeezy sales, underlining the significant impact the brand has had on the sportswear market.
Key Background: The Kanye West Fallout
Last year, Adidas officially severed ties with Kanye West in the aftermath of his antisemitic comments on social media.
The company, determined to distance itself from the controversy, announced plans to sell off the remaining Yeezy inventory, initially valued at a whopping $1.28 billion.
In a surprising twist, Adidas pledged to donate a “significant amount” of the sales to organizations combatting racism and antisemitism, attempting to salvage its reputation amidst the scandal.
Previous Consideration and Cost
This isn’t the first time Adidas has mulled over the idea of a write-off. In August, the sportswear giant explored the possibility, estimating a potential cost of $437 million.
The company also revealed that the “discontinuation of the regular Yeezy business” had already set them back the same staggering amount in the first half of 2023.
A potential write-off not only signals a financial hit for Adidas but could also impact the perceived value of the Yeezy brand in the company’s financial statements.
As the saga continues to unfold, the fashion and sneaker world eagerly awaits Adidas’ final decision on whether to write off the remaining Yeezy inventory, a move that could reshape the landscape of high-profile brand partnerships in the industry.