Yeezy shoes are still stuck in limbo after Adidas parted ways with Ye

Ye, formerly known as Kanye West, has been dropped by the shoe company over anti-Semitic comments in recent months.

FRANKFURT, Germany — Adidas saw operating profits fall in the first three months of the year as the German sportswear company’s break with the rapper formerly known as Kanye West and his popular shoe brand Yeezy cost 400 million euros ($441 million) of lost sales.

The company is stuck with 1.2 billion euros ($1.3 billion) of unsold Yeezy shoes after it cut ties in October with the rapper now known as Ye over his anti-Semitic and other offensive comments on social media and in interviews.

Adidas was “increasingly close to making a decision” about what to do with sneakers stacked up in warehouses and “the options are narrowing,” new CEO Bjorn Gulden said on a conference call Friday. But with “so many stakeholders” involved in the discussions, no decision had yet been reached, he said.

Gulden declined to say whether the destruction of the shoes had been ruled out, but the company was “trying to avoid that”. He has previously said other options have drawbacks: from paying royalties to Ye to sell the sneakers, peddling dishonesty if the shoes are sewn up, and expected resales if they are given away to people in need due to their high market value.

Losing the Yeezy brand “obviously hurts us,” Gulden said in a statement. The break will cut earnings by 500 million euros this year if Adidas decides not to sell remaining Yeezy shares, the Herzogenaurach-based company said.

Profit fell to 60 million euros in the first quarter from 437 million euros in the same period a year ago. Net sales fell 1% to 5.27 billion euros and would have risen 9% with the Yeezy line, the company said on Friday.

Gulden said results for Adidas were “a little better than we expected” as the company looks to restart growth and move beyond its break with Ye. He called 2023 “a transitional year” on the road to “a better ’24 and a good ’25.”

The company also faces other problems related to Ye. Investors sued Adidas a week ago in the US, claiming the company was aware of Ye’s hurtful remarks and harmful behavior years before the split and failed to take precautionary steps to limit financial losses.

The lawsuit — which represents people who bought Adidas stock between May 3, 2018 and February 21, 2023 — pointed to comments from 2018 in which Ye suggested slavery was a “choice” and reports of Ye making anti-Semitic statements before staff Adidas.

The company said last week that it has rejected “these unsubstantiated claims and is taking all necessary steps to vigorously defend against them.”

The end of the partnership with Ye also cost Adidas 600 million euros in lost sales in the last three months of 2022, helping to lead the company to a net loss of 513 million euros.

An operating loss of €700 million is possible this year, Adidas said, mainly due to the €500 million hit it would take if it didn’t sell existing Yeezy shoes.

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