Adidas says it plans to sell the remaining Yeezy sneakers
Adidas says it plans to sell remaining stocks of Yeezy sneakers from its defunct partnership with Kanye West for at least cost price.
The firm cut ties with the rapper and fashion designer, who is also known as Ye, in 2022 after he made a series of antisemitic comments on social media.
But demand for Yeezy sneakers has not faded, as they remain hugely popular in the resale market.
It comes after currency fluctuations cost the firm €1bn ($1.08bn; £850m).
The German sportswear giant’s finances were impacted last year by the discontinuation of the Yeezy business and as it cut prices to wholesalers to shrink stockpiles of goods, Adidas said in a statement.
Despite facing significant headwinds, Adidas posted an operating profit of €268m in 2023 and said it expects to almost double that figure this year.
“The improvement is due to the better operating business of around €100 million and the decision to not write off €268 million of Yeezy inventory,” the company’s chief executive Bjørn Gulden said.
Mr Gulden was brought in from rival sportswear firm Puma at the start of 2023 to drive the turnaround of Adidas after the breakup with the Yeezy brand left it with unsold sneakers worth around €1.2bn.
Even though the company sold some of its Yeezy stock last year net sales from the partnership were around €450m lower than in 2022.
Adidas announced its intention to liquidate its remaining Yeezy inventory at a price no less than the production cost, aiming to offset losses incurred from its once-profitable collaboration.
Despite this strategy, the company’s latest financial forecast still anticipates a potential write-down of its remaining Yeezy stock, estimated to amount to approximately €300 million.
Adidas further disclosed that it faced challenges stemming from the devaluation of the Argentine Peso towards the close of 2023.
Argentina’s newly elected President, Javier Milei, implemented a drastic devaluation of the nation’s currency exceeding 50% in December, as part of what he described as necessary “economic shock therapy” for the country.
Additionally, the company cautioned that the repercussions of this devaluation are expected to persist and affect its profits throughout the current year.
For decades, Adidas has been the official supplier of jerseys for Argentina’s national football team.
Last week, rival sportswear firm Puma also said Argentina’s currency devaluation hit its financial results as the region was its biggest and fastest-growing market.
