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Adidas Could Lose More than $1 Billion In Sales After Dropping Kanye West’s Yeezy Brand

When Adidas severed ties with Kanye West over anti-Semitic remarks last year, the hip-hop mogul was knocked out of the billionaire’s club. Now it comes to light that the German sports retail giant reportedly will lose an estimated billion dollars in sales by ending its long-term and highly successful partnership with the rapper.

LOS ANGELES, CA – OCTOBER 21: Kanye West is seen on October 21, 2022 in Los Angeles, California. (Photo by Rachpoot/Bauer-Griffin/GC Images)

A Pricey Breakup

Late last week, the company revealed it’s expected to lose $1.3 billion in revenue this year because it is no longer selling West’s designer Yeezy clothing and shoes. 

Adidas ceased its nine-year partnership with the rapper in October 2022 after the Yeezy line generated an estimated $1.8 billion in annual revenue for the company. 

Adidas announced that its financial guidance for 2023 “accounts for the significant adverse impact from not selling the existing stock.” The company had planned to “repurpose” the remaining Ye clothing, but if that strategy fails Adidas said that could cost the company $534 million in operating profit this year.

Some experts say such a plan is fruitless. “There really are no good options for this distressed brand that sat somewhere between prestige and luxury,” Burt Flickinger, retail expert and managing director at retail consultancy Strategic Resource Group, told CNN.

Lat year, Adidas issued a statement about ending its partnership with West, who is now called Ye, because it “does not tolerate antisemitism and any other sort of hate speech.” 

This move followed Kanye’s turning to Twitter and said he would go “death con 3 on JEWISH PEOPLE.” He doubled down on the remark during several media interviews.

In its statement, Adidas added his comments were “unacceptable, hateful, and dangerous.” Adidas said the comments violated the company’s “values of diversity and inclusion, mutual respect and fairness.”

Ye lost several partnerships over the remakes, but Adidas was one of the last ones to sever ties. Initially, it said it wanted to take the situation under review.

Ye previously had pushed back, saying, “I can say antisemitic s*** and Adidas cannot drop me” reportedly on the same day the Anti-Defamation League called on Adidas to release his line.

Ye further had fanned the flames by wearing a “White Lives Matter” T-shirt in public.

The Anti-Defamation League categorizes the phrase as a “hate slogan” used by white supremacist groups. 

Not Good Times for Adidas

Besides looking for money from the Ye fallout, Adidas is losing millions on its deal with Beyoncé’-led’s Ivy Park brand. According to a recent Wall Street Journal report, sales of the streetwear brand fell 50% in 2022 to about $40 million — well below its projections of $250 million. Meanwhile, the singer is still raking in $20 million annually from the partnership, regardless of sales and sales projections.

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