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(Lead image via EDWARD BERTHELOT/GETTY IMAGES)
Yeezy season is officially upon us and the return of the infamous sneaker line reportedly earned adidas $565 million, per Financial Times.
In November 2022, adidas officially terminated its contract with Kanye “Ye” West following the anti-semitic remarks that the artist made online, as well as cyberbullying adidas executives.
The decision to end the successful partnership left adidas with over $530 million of Yeezys with the leftover Yeezy inventory projected to lower adidas revenue by $1.29 billion.
With this in mind, adidas decided to move forward and sell the remaining stock with adidas CEO Bjørn Gulden saying, “Burning is not the solution. What we are trying to do over time is to sell part of these goods and then donate to organizations that help us and that also have been hurt by Kanye’s statements.”
Since then, adidas released its first batch of Yeezys at the end of May, resulting in $565 million in sales. It’s been reported that 4 million pairs of sneakers were sold. Legally, Ye is entitled to royalties from the sneaker sales which Gulden confirmed in March 2023.
For the first restock, adidas offered 15 different Yeezy models including the adidas Yeezy Boost 350 V2 CMPCT “Slate White,” the adidas Yeezy Boost 350 “Pirate Black,” the adidas Yeezy Foam RNR “MX Cinder,” and more.
Although the value of the orders received was more than $565 million, the net sales were lower than previous drops. By the time adidas had dropped Ye in 2022, Yeezy had generated $1.8 billion in sales and over $770 billion in operating profit.
Even with the success of this Yeezy restock, adidas still expects to have its first operating loss in 31 years. The brand’s quarterly results will be reported on August 3, 2023.
“adidas will probably have to update their revenue and profit guidance to reflect the initial sale of Yeezy inventory,” said Thomas Chauvet, head of luxury and sporting goods research at Citibank via Financial Times.
The company is currently engaged in ongoing discussions regarding the amount to be donated to various charities, according to sources. As a first step, five charities in the US and China, including the Anti-Defamation League and the Philonise and Keeta Floyd Institute for Social Change, have been selected. However, no final decision has been made regarding the total donation, with discussions centering on potentially contributing over $8.5 million across these five charities.
Additionally, it is reported that the final amount donated from the inventory sales will be significantly larger. adidas is committed to allocating a “significant share” of the profit generated from the Yeezy restocks to charity. The company declined to comment on the matter, citing a quiet period ahead of its half-year results.
adidas also plans to utilize the proceeds from the Yeezy drops for various purposes, including paying royalties to Ye and covering expenses related to the termination of the Yeezy partnership. These expenses include staff layoffs, the closure of production capacity, and legal costs.
In March, adidas’ Chief Executive Björn Gulden had stated that the company might not make a profit on its remaining Yeezy inventory. Nevertheless, the company remains dedicated to its decision to sell the remaining stock and officially end the adidas Yeezy era.
adidas is gearing up for its next round of Yeezy restocks in August, which is set to hit retailers like Foot Locker, with sneakers like the adidas Yeezy Boost 350 V2 “Bone” and the adidas YEEZY Boost 350 V2 “Hyperspace” apart of the lineup.
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