Sportswear firm Adidas’s commercial fall-out with American rapper and fashion mogul Ye, formerly known as Kanye West, and his brainchild Yeezy, has led to a major decline in the company’s net sales. The sportswear giant is now saying that the ending of the collaboration is “hurting” the business, costing it $441 million (€400 million) in lost sales, according to reports.
In the first three months of the year, the company’s total revenue fell by 1 per cent because it distanced itself from the rapper after his largely condemned anti-Semitic remarks, reported BBC.
In its latest results, Adidas said sales in North America fell by 20 per cent as the region was particularly affected by the Yeezy split.
Adidas chief executive Bjorn Gulden told BBC that the loss of Yeezy is “of course hurting” them. And, that if it decided not to “repurpose” its remaining unsold Yeezy stock, this would hit its operating profit by $554 million (€500 million) this year.
Gulden added that Adidas was “getting closer and closer to making a decision” on what do to with the $1.3 billion worth of unsold Yeezy sneakers stacked up in warehouses and “options are narrowing”. But with “so many interested parties” involved in the discussions, they are yet to reach a decision, as of now.
Speaking about the lawsuit filed by investors who claim Adidas didn’t address the rapper’s problematic behaviour for years, the company said that it rejected these “unfounded claims”, adding that it would take “all necessary measures to vigorously defend” itself.
Investors alleged in the lawsuit that Adidas executives failed to limit financial losses and take precautionary measures in time.
Despite the dip, the overall sales were better than what analysts had predicted. The latest report says that sales were up 9 per cent when the impact of the Yeezy split was excluded. And, the company has reported a higher-than-expected operating profit of $66 million (€60 million).
The company cut its ties with Ye in October last year following major backlash for his anti-Semitic comments and erratic behaviour. Later, several distasteful things came to light, with some former employers accusing Ye of using “mind games”, watching pornography in front of employees, and bullying.
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