Adidas intends to offload the remaining inventory of Kanye West's Yeezy sneakers, valued at approximately $300 million. The company aims to set a price for these sneakers that is at least equal to their production costs.
"The company plans to sell the remaining Yeezy product at least at cost in 2024". - Adidas
The sportswear company from Germany had initially intended to eliminate around 300 million euros ($324 million) worth of Yeezy merchandise.
Adidas is currently making arrangements to offload approximately 268 million euros ($289 million) worth of its remaining inventory.
"Our consumer, retail and trade research has shown that we can sell this remaining inventory in 2024 for at least the cost price," - CEO Bjørn Gulden.
The small amount of stock Adidas won't sell, which it said is worth in the low double-digit millions of euros, has been written off because it was damaged or "very broken in sizes," Gulden said.
Adidas has decided to write off a small portion of its stock, which is valued at a few million euros. This stock has been deemed unsellable due to either damage or being in unconventional sizes, according to Gulden.
In October 2022, Adidas ended its association with Ye, the artist previously recognized as Kanye West, following a string of offensive remarks targeting the Jewish community. These comments led to a temporary suspension of his Twitter account, which is now known as X. Ye also expressed a controversial belief that 400 years of slavery could be viewed as a voluntary decision and distributed "White Lives Matter" shirts to individuals experiencing homelessness on Skid Row.
Adidas, the sports retailer, announced in last May that it would donate the profits from its remaining Yeezy stock to various charities, such as the Anti-Defamation League and the Philonise & Keeta Floyd Institute for Social Change. These charities include the one led by George Floyd's sister. Certain media has reached out to Adidas for information on the exact amount donated and whether they plan to continue donating a portion of the profits from future Yeezy sales in 2024.
Adidas announced on Wednesday that its projected financial outlook for 2024 relies on the expectation of selling the stock without generating a profit, but rather at its original cost.
In 2022, Adidas reported selling Yeezy merchandise totaling 1.2 billion euros. The following year, in 2023, they sold 750 million euros worth, resulting in an estimated operating profit of approximately 300 million euros.
Adidas announced that it did not deem it necessary to completely discard most of its Yeezy stock. Additionally, its operational business for the last quarter performed better than anticipated. Consequently, the company achieved an initial operating profit of 268 million euros in 2023, exceeding its projected loss of 100 million euros. In the previous year, Adidas recorded an operating profit of 669 million euros.
In a statement, Gulden acknowledged that our financial performance is currently unsatisfactory. Adidas attributed this to the impact of currency fluctuations, specifically highlighting the devaluation of the Argentine Peso, which resulted in a loss of $1 billion.
However, he expressed optimism regarding the increase in sales for the year 2024 and anticipated the company to achieve an operating profit of approximately 500 million euros.