FRANKFURT, Germany (AP) — It’s been nearly seven months since Adidas parted ways with the rapper known as Kanye West.And boxes of his famous Yeezy shoes are still piled up in warehouses.
The fate of unsold Yeezy shares worth 1.2 billion euros ($1.3 billion). The German sportswear company is weighing in.
Adidas is “getting closer to making a decision” and “options are narrowing” on what to do with sneakers, says new CEO Bjorn Gulden said on a conference call Friday after reporting 400 million euros ($441 million) in lost sales earlier this year.
But he said no decision had yet been reached, with “several interested parties” involved in discussions.
After cutting ties with Ye in October over his anti-Semitic and other offensive comments, Adidas has shelved its flagship Yeezy brand of shoes. On social media and in interviews.
Goulden, who became CEO in January after the Ye split, declined to say whether the disposal of shoes had been ruled out, but the company was “trying to avoid it”.
He previously said other options have drawbacks: selling the sneakers would mean paying Ye a royalty, repurposing them to remove the brand identity would be dishonest, and giving them away to those in need would lead to resale due to their high market value.
Gulden won’t say how many pairs of Yeezy shoes Adidas has “because consumers will know how many we have and that will affect demand.”
Losing the Yeezy brand “definitely hurts us,” Gulden said in a statement. Income will decrease if separated The Herzogenaurach-based company said it could make up to 500 million euros this year if Adidas decides not to sell its remaining Yeezy stake.
Net sales fell 1% to 5.27 billion euros in the first quarter, and the Yeezy line would have risen 9%, the company said. It posted a net loss of 24 million euros, down from a profit of 310 million euros in the same period a year ago.
Operating profit, excluding certain items such as taxes, fell to 60 million euros from 437 million euros a year earlier.
Gulden said Adidas’ results were “a little better than we expected” as the company seeks to restart growth and move beyond the breakup with Ye. He called 2023 a “year of transition” on the road to “a great ’24 and a good ’25.”
The company faces other issues connected to the rapper. Investors sued Adidas a week ago In the US, the company was aware of Ye’s offensive comments and harmful behavior years before the breakup and failed to take precautions to limit financial losses.
The lawsuit — which represents people who bought Adidas bonds between May 3, 2018 and February 21, 2023 — points to comments from 2018 where Yeh suggested slavery was a “choice” and reports that Yeh made anti-Semitic statements in front of Adidas employees.
The company said last week that it “rejects these baseless claims and will take all necessary steps to vigorously defend ourselves against them.”
Ending the Ye partnership helped Adidas lose 600 million euros in sales in the last three months of 2022, leading the company to a net loss of 513 million euros.
An operating loss of 700 million euros is possible this year, Adidas said, largely because of the 500 million euro hit it will take if it doesn’t sell Yeezy shoes.