Adidas is contemplating the possibility of discarding the remaining $320 million worth of unsold Yeezy shoes following its separation from Ye, the artist formerly known as Kanye West.
Within the upcoming weeks, the company will determine whether or not to initiate a third release of the footwear in order to contribute further donations to organizations combatting antisemitism.
In October 2022, the shoe and sports apparel company ended their partnership with Ye due to his online antisemitic remarks. Earlier this year, they successfully sold 750 million euros worth of their shoes through Adidas smartphone apps and their official website.
A portion of the profits were allocated to organizations such as the Anti-Defamation League and the Philonise & Keeta Floyd Institute for Social Change, led by Philonise Floyd, a dedicated advocate for social justice and the brother of George Floyd.
In its earnings forecast for the year, the company mentioned the potential write-off of the remaining Yeezy inventory. This adjustment has contributed to narrowing the expected loss to 100 million euros, compared to the previous estimate of 450 million euros.
CEO Bjorn Gulden, who assumed leadership following the separation from Yeezy, is spearheading efforts to rebound from the loss of the once lucrative Yeezy business.
Amidst a surge in antisemitism and islamophobia following the Israel-Hamas war, Adidas has made an announcement. Gulden acknowledged the dire situation in the Middle East, mentioning that a portion of their 600+ employees in Israel had been enlisted for military duty.
In response, the company has initiated donation programs to aid the entire region, including Gaza. Collaborating with the SOS Kinderdoerfer weltweit children's relief agency, Adidas is committed to assisting those impacted by the ongoing conflict.
According to Gulden, there is a belief that the remaining Yeezy stock may be deemed worthless and discarded.
However, the company is constantly assessing the situation and has not made any definitive plans yet. At the moment, this is considered the worst-case scenario from a financial standpoint, although no final decision has been reached.
He further mentioned that their aspirations for the upcoming year include conducting additional drops and maximizing their potential to generate donations.
However, it is important to note that they have not yet made a financial decision, which is why the outlook remains uncertain.
He mentioned the existence of "numerous possibilities" and mentioned that the shoes were stored in various places. He chose not to disclose the company's plans for the unsold shoes.
After parting ways with Ye, the Herzogenaurach-based company was faced with the predicament of dealing with 1.2 billion euros worth of unsold Yeezys.
Finding a responsible solution for disposing of them proved to be a challenge. The company wanted to avoid giving the shoes to people in need as it could lead to informal resales, given their high market value.
Additionally, they deemed it dishonest to alter the shoes by removing the brand identification through restitching.