adidas announced that it will sell some of the merchandise accumulated after its defunct Yeezy association with the rapper Kanye West and will donate part of the proceeds to international organizations, the CEO said today Bjoern Gulden.
The German sportswear giant has been in trouble for the creation of the Yeezy line ever since it cut ties with West over his antisemitic comments late last year, with controversy weighing on his actions and hitting his bottom line.
Millions of sneakers of the Yeezy brand, with a retail value of USD 1.3 billion, are stored after their sale was suspended. Their value on the resale market has skyrocketed since Adidas stopped producing them, with some models more than doubling in price.
“What we are trying to do now over time is sell some of this merchandise (…) burning the merchandise would not be a solution” (Gulden)
Addressing investors in the southern German city of Fuerth after the debacle contributed to the company’s first annual loss in 31 years, Gulden said it had not yet been determined when and how the merger would take place. planned sale.
“What we’re trying to do now over time is sell some of this merchandise…burning the merchandise would not be a solution,” he said, adding that the proceeds would be donated to international organizations to which West, who changed his name. by Ye in 2021, he had wronged with his comments.
Adidas’ business has been hit by the loss of the Yeezy brand, the sportswear giant said on Friday as it announced its first-quarter 2023 results, highlighting the financial impact of the company’s decision to cut ties with the rapper. .
In October last year, Adidas joined other brands in the severing ties with West after the rapper made a series of anti-Semitic comments on social media and in podcast appearances. The rapper’s actions resulted in him being banned from various social media platforms.
Adidas, the world’s second-largest sportswear brand, has been struggling to figure out what to do with the mountain of slippers Yeezy not sold in their inventory. Since cutting ties with West, the company hopes to register some losses greater than USD 772 million in 2023 due to unsold Yeezy shoe stocks.
The sportswear giant posted a 1% decline in first-quarter revenue year-over-year, despite analysts forecasting a 4% decline. Adidas posted revenue of $5.82 billion in the first quarter of 2023. The revenue comparison drag on the company’s year-over-year numbers due to the Yeezy business disruption, was primarily across the North America, Greater China and EMEA.
“2023 will be a bumpy year with disappointing numbers, where maximizing our short-term financial results is not our goal” (Gulden)
“2023 will be a bumpy year with disappointing numbers, where maximizing our short-term financial results is not our goal,” the Adidas CEO said during his earnings call.
He also admitted that the loss of the Yeezy brand “of course is hurting us.” However, the German shoe and clothing company claims that it holds all patents and copyrights to the intellectual property, designs and colorways, and that it can drop the brand name and still sell the sneaker.
Last week, a group of Adidas shareholders filed a class action lawsuit against the company, saying it should have anticipated the risks of partnering with West.
By selling off some of the stock, the company is potentially minimizing the loss of about $700 million this year, but it’s unclear how many sneakers will be sold or how much of the proceeds will be donated.
If the products are sold, West will be entitled to previously agreed commissions: 15% of turnover, according to the media. Adidas declined to comment on the matter.
Also on Thursday, Adidas CFO harm ohlmeyersaid an internal investigation into West’s alleged misconduct – which included displaying pornographic material, making anti-Semitic comments and harassing female employees – had not substantiated the allegations.
However, the investigation also concluded that the rapper’s erratic and sometimes inappropriate behavior created a difficult working environment at Adidas, Ohlmeyer said, adding that the company was now in the process of implementing measures to prevent such problems from occurring again in the future. .
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Source-www.infobae.com