Adidas considers writing off USD320M for unsold Yeezy shoes after Kanye West split
Date
11/15/2023 6:27:53 AM
(MENAFN) Adidas is contemplating a significant financial hit as it considers writing off 300 million euros (USD320 million) for unsold Yeezy shoes following its decision to sever ties with rapper Ye (formerly Kanye West). The company, which parted ways with Ye in October 2022 due to antisemitic remarks, had previously sold 750 million euros worth of Yeezy shoes in two releases this year. The profits from these sales supported organizations such as the Anti-Defamation League and the Philonise & Keeta Floyd Institute for Social Change.
The potential write-off is included in Adidas's outlook for this year, where the company narrowed its expected loss from 450 million euros to 100 million euros. CEO Bjorn Gulden, who assumed leadership after the Yeezy breakup, is spearheading efforts to recover from the loss of the once-profitable Yeezy business. The decision on whether to proceed with a third release of Yeezy shoes next year to generate more donations against antisemitism is still pending.
The announcement comes amid a surge in antisemitism and Islamophobia, particularly following the Israel-Hamas conflict outbreak. Gulden acknowledged the challenging circumstances in the Middle East, revealing that some of the company's Israeli employees had been called up for military service. Adidas is actively engaged in donation programs for the region, collaborating with the SOS Kinderdoerfer weltweit children's relief agency to aid those affected by the conflict.
Gulden emphasized that the assumption in the outlook is that the remaining Yeezy inventory "will be written off." However, he clarified that ongoing evaluations are being made, and no final decision has been reached. The financial impact of the potential write-off is currently the worst-case scenario.
This development reflects Adidas's strategic response to the challenges posed by the separation from Kanye West, with a focus on financial recovery and continued support for social causes amid global tensions.
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