The blow to cancel the collaboration with Kanye West will be less than expected in the Adidas accounts. The success in sales of the remaining stock of his Yezzy footwear line reduces the final bill and even improves the forecasts for the year.
The company announced this Wednesday that it has raised 437 million dollars, about 400 million euros, by putting up for sale part of the inventory of their collaboration, which came to an end due to the controversy over the anti-Semitic comments of the American rapper. Up to 110 million euros of the turnover will be donated to various organizations that combat anti-Semitism and other forms of hate.
Since cutting ties with West, the company has searched for a way to cash in on Yeezy’s $1.2 billion worth of stock. “It beats destroying inventory and allows us to make substantial donations,” Adidas CEO Bjorn Gulden said.
The company has been liquidating the remaining stock in various sales windows. This Wednesday the second batch of stock was released. The first, in May and June, was completely sold out. The company has not wanted to report whether West receives royalties for them, something that it will review in the contracts. Gulden has recognized that the sale of Yeezy is helping the cash flow and financial stability of the company, also boosting operating profits of 176 million euros in the second quarter of the year.
The end of the collaboration with West has been a severe setback for Adidas due to the popularity of the line. At first, he calculated that, but sales are going better than expected and allow the hole to be closed. Initially, the company predicted losses of 700 million euros for this year. Sales have brought that number down to 450 million.
Adidas is even more optimistic about the full year, forecasting a mid-single-digit drop in revenue, compared to earlier forecasts of a higher loss.
Looking ahead, in any case, sales are not expected to go as well. Adidas itself acknowledges that it does not know if the demand will remain strong. Especially since the first sales had some of the most sought after and expensive models, such as the Yeezy Boost 700 or the Yeezy Boost 350. In the future, cheaper products will go on sale, such as sandals.
Adidas terminated the contract it had with Kanye West on October 25 after the rapper made anti-Semitic comments on his social media. In the publications, he complained that many of the executives in the entertainment world were Jewish. In them he also apparently threatened the Jewish community, which caused his Instagram and Twitter accounts to be suspended.
West continued to widen the controversy and after a little over a month he gave an interview with his face covered by a ski mask in which he assured that he liked Adolf Hitler and that the Nazis did good things. “I see good things in Hitler. Every human being has something of value that he contributed, especially Hitler,” he declared.
