Adidas (ADDYY), the giant footwear and apparel manufacturer had broken its partnership with celebrity rapper Kanye West and his Yeezy brand, after his antisemitic comments last year. As the company had a huge inventory of sneakers and shoes from the brand, Adidas decided to sell the footwear and donate part of the proceeds to charities that help combat hate and antisemitism.
In its second quarter report, Adidas CEO Bjørn Gulden said, “We will continue to carefully sell off more of the existing Yeezy inventory.” The CEO described the move as being better than writing off or destroying the inventory.
Gulden also said that selling the inventory of celebrity Kanye West’s Yeezy brand would let them make substantial donations to organizations that helped to combat antisemitism.
The Adidas CEO also mentioned that the sale of the inventory helped the company’s “cash flow” as well as its “general financial strength.”
Adidas confirmed that the strong sales of Yeezy inventory had helped the footwear giant narrow the earlier full year loss with the recent release of surplus stock. However, company executives are not commenting on how the demand for the Yeezy brand would be the next time they drop more inventory.
The second quarter reported earnings of roughly 400 million euros for surplus Yeezy shoes. This additional revenue reduced the estimated loss by Adidas for the year to about 450 million euros. Earlier, the shoe and apparel giant had estimated a loss of 700 million euros for the year.
Earlier, Adidas had said that currency-neutral revenues would be at a high single digit rate. The recent estimate has been changed to a mid-single digit rate for the year 2023.
Adidas owns the copyright for the Yeezy brand. It has not firmly indicated whether it would redesign or rebrand or discard the Yeezy brand. As of now, it is looking to get rid of its surplus inventory of Kanye West’s Yeezy brand.
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