Adidas AG is pausing sales of Yeezy sneakers for the rest of this year, but Chief Executive Officer Bjorn Gulden aims to work through the rest of the stockpile of controversial footwear in 2024.
The German company has already garnered about €750 million ($800 million) in sales from two Yeezy product drops since May. That’s helped it work through about 40% of its Yeezy inventory stored across various sites around the globe.
It still has about €300 million of the product left on its balance sheet that’s at risk of being written off if Adidas destroys the rest of the footwear.
“We of course hope that we can do more drops next year and that we can get value out of it and donate” proceeds to anti-hate groups, Gulden said Wednesday on a call with reporters. “But right now, financially, we haven’t made the decision.”
Before the two earlier Yeezy drops this year, Adidas engaged in talks with parties including retailers, consumers and Jewish organizations such as the Anti-Defamation League.
The German company had already donated or set aside a total of €140 million by the end of the third quarter, with the bulk of that money going into a new foundation that will handle future donations.
Now, Adidas is engaged in more talks with these groups as it considers options for the remaining 60% of its Yeezy inventory, Gulden said.
The company will probably try to sell that remaining stock in 2024 and could generate about €488 million in earnings before interest, taxes and donations to charity groups, Citi analysts said in a note Wednesday. That would probably bring in more than €950 million in additional revenue, the analysts said.
Adidas canceled the Yeezy collaboration in October 2022 — back when Gulden was still CEO of rival sports company Puma SE — following a string of antisemitic rhetoric from Ye, formerly known as Kanye West.
Gulden came under fire in September for saying on a podcast interview that he didn’t think Ye really meant what he said. He subsequently apologized for what he called his “misstatement” via the Anti-Defamation League.
On Wednesday’s media call, Gulden reiterated that it was the right decision to end the partnership with Ye and said there are no plans to resume business with the rapper and designer. “What he said was not acceptable,” Gulden said.
Gulden said his statements on the podcast had been taken out of context. He had been addressing a question about the risk associated with working with celebrities, he noted. “I apologized for what it caused and again, it was not said in the context that people interpreted,” he added.
