Adidas Says Dropping Kanye West Could Cost It More Than $1 Billion In Sales The separation of Adidas and Ye, formerly known as Kanye West, h...

Adidas Says Dropping Kanye West Could Cost It More Than $1 Billion In Sales

The separation of Adidas and Ye, formerly known as Kanye West, has resulted in a costly outcome. The sporting giant has warned the public of its predicted loss of $1.3 billion in revenue this year due to the inability to sell the designer's Yeezy clothing and shoes. The former 9-year partnership was dissolved last October due to the rapper's anti-Semitic remarks.

In a declaration, Adidas stated that its financial outlook for 2023 "incorporates the significant negative impact from not being able to sell the remaining stock." If the company fails to "re-invent" the remaining Ye apparel, Adidas reported that it could result in a $534 million operating profit loss for the year.

After the end of the partnership, Adidas had previously announced its attempt to sell the clothing without the Yeezy branding. The company hoped to save approximately $300 million in royalty payments and marketing fees by selling the sneakers under its own branding.

However, it seems that repurposing the clothing will still prove to be a challenge for Adidas, as indicated by a previous analyst.

"There are truly no suitable options for this troubled brand that sits between prestige and luxury," stated Burt Flickinger, a retail expert and managing director at Strategic Resource Group.

Other potential courses of action include destruction or donation of the unsold Yeezy clothing.

Adidas has also warned of "one-time costs" of $213 million due to a "strategic review" the company is undergoing.

"The figures speak for themselves, our current performance is not meeting expectations," stated Adidas CEO Bjorn Gulden in a statement. He assumed the role of top leader at the company in January, previously working for rival company, Puma.

Adidas announced last year that the partnership with Ye was terminated due to the company's policy of "not tolerating antisemitism or any other form of hate speech." The rapper's remarks were deemed "unacceptable, hateful, and dangerous" and violated the company's values of diversity, mutual respect, and fairness.

The partnership was put under review after Ye wore a "White Lives Matter" t-shirt, which the Anti-Defamation League classifies as a "hate slogan" used by White supremacist groups, including the Ku Klux Klan. In addition, Ye made anti-Semitic statements during a podcast rant against Jews.

Adidas has not mentioned any potential issues with its Beyoncé-led Ivy Park brand. However, this week, The Wall Street Journal reported a 50% decrease in sales for the once popular streetwear brand, totaling $40 million, compared to its internal projections of $250 million. Despite this, Adidas stated that the partnership with Ivy Park remains "strong and successful."

Shares of Adidas (ADDDF) experienced a 11% drop in trading in Frankfurt. Over the past year, Adidas (ADDDF) stock has declined by 45%.