Dropping Kanye West’s YEEZY Brand Resulted In Big Financial Loss For Adidas

Dropping Kanye West’s YEEZY Brand Resulted In Big Financial Loss For Adidas

Standing up for what you believe in can sometimes cost you. And for sportswear giant Adidas, cutting ties with Kanye West amid his antisemitic tirades has been a humbling experience.

The apparel company decided to no longer do business with West and his YEEZY brand in 2022. According to Reuters, its CEO, Bjorn Gulden, says that a “bumpy year with disappointing numbers” could be on the horizon.

“Adidas does not tolerate antisemitism and any other sort of hate speech,” the company shared in a statement at the time. “Ye’s recent comments and actions have been unacceptable, hateful, and dangerous, and they violate the company’s values of diversity and inclusion, mutual respect, and fairness.” What followed was an immediate halt on further production of YEEZY clothing or shoes and no plans for a relaunch.

The company’s concerns around its retail divorce from West come on the heels of its decision to split ways with Beyoncé and her Ivy Park brand.

However, the losses incurred upon its split from West have been much more substantial. In the final quarter of 2022, Adidas reported a net loss of $540 million due to unsold YEEZY products, according to AfroTech. Earlier this year, the company forecasted that it was gearing up for an operating loss of $738 million, with the CEO describing 2023 as a “transition year.” Though the year’s numbers seem bleak, the company has already adjusted to the big dip in its earnings. “Adidas is managing investors’ expectations,” said Mamta Valechha, equity research analyst at Quilter Cheviot, according to Reuters. “They are going in the right direction—China is recovering, inventories are still too high but at least sequentially down,” she added.

Gulden says that the company will possibly go into the green for the first time in the last two and half years; if they maintain their current trajectory; however, he also told the BBC that the split from West is “of course hurting us.”

The cost of taking a stand is rarely ever cheap.

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