Adidas still hasn’t found out what to do with its $1.3 billion stock of unsold Yeezy sneakers after cutting ties with rapper Kanye West over anti-Semitic remarks last yr.
CEO Bjorn Gulden outlined the corporate’s costly dilemma during a call with analysts Wednesday — noting that the choices available to Adidas, reminiscent of rebranding the sneakers and even literally burning the Yeezy inventory, all have major downsides.
“Depending on who you speak to, people will say you can’t destroy since it’s a sustainability issue, right? So, please don’t destroy.
“After which, those that are like, ‘Please don’t sell because you’ve gotten a repute issue,’” Gulden said throughout the earnings call.
“That’s why we haven’t made a call on it, since it’s a really complicated issue,” Gulden added.
The Yeezy imprint was some of the profitable segments of Adidas’ business until last yr, when the brand swiftly cut ties with West — who has legally modified his name to Ye — following a series of bizarre anti-Semitic tirades.
Adidas has a $1.3 billion stockpile of unsold Yeezys.AP
The German sports apparel giant warned that it would take a whopping $527.5 million hit to its earnings this fiscal yr if it doesn’t sell its remaining Yeezy apparel.
The messy breakup with West contributed to a dismal fourth-quarter result for Adidas, which posted a net lack of $540 million.
Gulden said Adidas would face “a number of reputational risk” if it tries to rebrand and sell the Yeezy merchandise.
“The opposite side is to say we burn it or we do whatever it takes then to destroy it, and it disappears, then you’ve gotten one other issue,” he added.
Adidas CEO Bjorn Gulden said the shoes probably shouldn’t be destroyed over “sustainability issues.”Getty Images
Kanye West faced universal criticism following an anti-Semitic meltdown last yr. Getty Images
Other options available to Adidas include selling the Yeezy inventory “at cost” — meaning the brand wouldn’t profit on the products — selling them at a small margin and donating the proceeds to charity.
Gulden also questioned the viability of simply donating the Yeezy sneakers to earthquake victims in Turkey or one other worthy cause. He suggested the high-end products would find yourself on the resale market.
“In the event you did that, they’ll come back again since the value of the product shouldn’t be the physical value of the ingredients, it’s the premium since it’s a brand and the merchandise that’s sold at a high price,” Gulden said.
Adidas cut ties with Kanye West last yr.Getty Images for Fast Company
The Adidas CEO said he has received “probably 500 different business proposals” from individuals who desired to buy up the remaining Yeezy sneakers for resale.
Gulden didn’t provide a timetable for a final decision on the inventory.
“I believe the goal that we’ve is to do what the probability is that it damages us the least and we do something good,” he added. “And that’s what we’re talking to many interested parties, those that have been hurt by this case, and are discussing what they think is the perfect option.”
