12/4/23, 9:02 PM Yeezy shoes still stuck in limbo after Adidas split with Ye | AP News

Yeezy shoes still stuck in limbo after Adidas split with Ye

BY DAVID MCHUGH
Published 6:18 PM GMT+5:30, May 5, 2023

FRANKFURT, Germany (AP) — It’s been nearly seven months since Adidas split with the rapper formerly
known as Kanye West, and boxes of his popular Yeezy shoes are still piled up in warehouses.

The fate of 1.2 billion euros ($1.3 billion) worth of unsold Yeezy stock is weighing on the German sportswear
company as it tries to engineer a turnaround from the loss of the lucrative sneaker line and the continued
fallout over its former ties to Ye.

Adidas is “getting closer and closer to making a decision” on what to do with the sneakers and the “options
are narrowing,” new CEO Bjorn Gulden said in a conference call Friday after reporting 400 million euros ($441
million) in lost sales at the start of the year.

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12/4/23, 9:02 PM Yeezy shoes still stuck in limbo after Adidas split with Ye | AP News
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But with “so many interested parties” involved in the discussions, no decision had yet been reached, he said.

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12/4/23, 9:02 PM Yeezy shoes still stuck in limbo after Adidas split with Ye | AP News
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Adidas is stuck with stacks of its flagship Yeezy brand shoes after ending its relationship with Ye in October
over his antisemitic and other offensive comments on social media and in interviews.

Gulden, who became CEO in January after the Ye split, declined to say if destroying the shoes had been ruled
out but that the company was “trying to avoid that.”

He has previously said other options have drawbacks: selling the sneakers would mean paying royalties to Ye,
restitching them to remove the brand identification would be dishonest, and giving them away to people in
need could lead to resale because of their high market value.

Gulden would not say how many pairs of Yeezy shoes that Adidas is stuck holding “because then the
consumer would know how many we have and that could have an impact on demand.”

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Losing the Yeezy brand is “of course hurting us,” Gulden said in a statement. The breakup will reduce
earnings by 500 million euros this year if Adidas decides not to sell the remaining Yeezy stock, the
Herzogenaurach-based company said.

Net sales declined 1% in the first quarter, to 5.27 billion euros, and would have risen 9% with the Yeezy line,
the company said. It reported a net loss of 24 million euros, a plunge from a profit of 310 million euros in the
same period a year ago.

Operating profit, which excludes some items like taxes, was down to 60 million euros from 437 million euros a
year earlier.

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12/4/23, 9:02 PM Yeezy shoes still stuck in limbo after Adidas split with Ye | AP News
Gulden said the results for the Adidas were “a little better than we had expected” as the company seeks to
restart growth and move beyond the breakup with Ye. He called 2023 “a year of transition” on the way to “a
better ’24 and a good ’25.”

The company faces other problems tied to the rapper. Investors sued Adidas a week ago in the U.S., alleging
the company knew about Ye’s offensive remarks and harmful behavior years before the split and failed to
take precautionary measures to limit financial losses.

The lawsuit — representing people who bought Adidas securities between May 3, 2018, and February 21,
2023 — pointed to 2018 comments where Ye suggested slavery was a “choice” and reports of Ye making
antisemitic statements in front of Adidas staff.

The company said last week that it rejected “these unfounded claims and will take all necessary measures to
vigorously defend ourselves against them.”

Ending the Ye partnership also cost Adidas 600 million euros in lost sales in the last three months of 2022,
helping drive the company to a net loss of 513 million euros.

An operating loss of 700 million euros is possible this year, Adidas said, mostly due to the 500 million-euro hit
it would take if it doesn’t sell the existing Yeezy shoes.

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