Adidas made a strategic decision to refrain from writing off the majority of its unsold Yeezy inventory and instead plans to sell the remaining shoes at least at the cost it paid for them. This move comes as the apparel retailer aims to recover its losses following its split with rapper Ye, formerly known as Kanye West, due to a series of antisemitic remarks.
Initially, Adidas had contemplated writing off approximately 300 million euros (about $325 million) in unsold Yeezy inventory. However, the company’s recent announcement indicates a shift in its approach. Despite the challenges posed by the fallout with Ye, Adidas managed to achieve an operating profit of 268 million euros in 2023, surpassing its earlier projection of a 100 million euro loss. The company attributed this success to its strong operational performance during the fourth quarter and its decision to sell most of the remaining Yeezy inventory.
In a statement, Adidas clarified that its 2023 operating profit now only includes a minimal write-off of Yeezy-related inventory. Instead of writing off the majority of the inventory, the company intends to sell it at least at cost in 2024. CEO Bjørn Gulden emphasized the findings of the company’s research, which indicated that the remaining inventory could be sold in 2024 without incurring additional losses.
Adidas’ sales of Yeezy merchandise in 2023 amounted to approximately 750 million euros. Part of the profits from these sales were previously donated to organizations such as the Anti-Defamation League and the Philonise & Keeta Floyd Institute for Social Change. However, it remains uncertain whether Adidas will allocate any portion of the proceeds from the remaining Yeezy sales to charitable causes. The company stated that it does not expect any profit contribution from Yeezy in fiscal 2024.
When asked about future donations, Adidas declined to provide specific details. The company’s decision regarding charitable contributions from the remaining Yeezy sales in fiscal 2024 remains undisclosed.
(Source: Complex | Sneaker News | WSJ)
