Adidas makes a surprising decision on Kanye West's Yeezy brand

The brand has been trying to clear out stock since the two sides split in October 2022.

Feb 3, 2024 - 00:30

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Adidas has made another major decision on how it will approach the inventory drain of the Yeezy brand in 2024.

The German-based fashion brand announced on Jan. 31 that it will no longer write off the unsold Yeezy inventory that it has and instead sell the shoes "at least" at cost.

"Following the latest decision, the 2023 operating profit now only includes a low double-digit million amount of Yeezy-related inventory write-offs," Adidas said in the press release. "Instead, the company plans to sell the remaining Yeezy product at least at cost in 2024."

Adidas divorced with Kanye West, now known as Ye, in October 2022 after a tirade of anti-Semitic remarks from the rapper. The company decided in the middle of 2023 that it would continue to sell the remaining Yeezy inventory — about $1.3 billion worth — and donate the proceeds to charity.

Between October 2022 and the announcement of the beginning of reselling Yeezy merchandise in May, Adidas said it lost about $441 million in sales. The company considered many options for the merchandise — including destroying the items — but settled on the donations.

"The discontinuation of the Yeezy business had a negative effect on the top-line development during the year," Adidas said in the press release. "This represented a drag of around €500 million on the year-over-year comparison."

In 2023, Adidas generated about €750 million (or about $810 million) in revenue from Yeezy merchandise and donated some of the profits to different charities such as the Anti-Defamation league.

Adidas announced that it expects single-digit growth for its sales in 2024, but also noted that it does not expect Yeezy merchandise to have any effect on its operating profit for the year.

"In 2024, the company expects currency-neutral sales to grow at a mid-single-digit rate," Adidas CEO Bjorn Gulden said in the release. "This top-line guidance assumes that Adidas will sell the remaining Yeezy inventory at cost, which would result in sales of around €250 million in 2024. Excluding the Yeezy revenues in both years, the top-line guidance reflects currency-neutral growth at a high-single-digit rate in the underlying adidas business."

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