Adidas has put the brakes on its Yeezy drops for the remainder of the year as the company evaluates the best way to proceed with offloading the product.
In a Wednesday call with reporters discussing the company’s third quarter results, Adidas CEO Bjorn Gulden said the company decided “for many reasons” to halt Yeezy product drops for the remainder of the year, but did not give specific examples. Adidas will reassess this decision in the next couple of months.
“We have decided not to have more launches this year and we will evaluate the market in the next couple of months to see what we will do next year,” Gulden said.
Adidas’ current financial outlook represents the assumption that Adidas writes off the remaining 300 million euros (or $320 million) worth of remaining Yeezy products, which would mean no more Yeezy drops at all.
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“Right now, that is financially the worst case,” Gulden said, noting that this decision is subject to change upon further evaluation.
In recent quarters, Adidas has seen positive results from its decision to start selling Yeezy merchandise once again after it parted with Yeezy founder Kanye West and his brand last October in light of repeated antisemitic statements. Adidas said it would donate a “significant” portion of proceeds from these sales to organizations representing people who “were hurt” by Kanye West’s comments. Before deciding to sell this merchandise again, Adidas weighed a variety of options for what to do with the leftover $1.3 billion (or 1.2 billion euros) worth of Yeezy product, which was projected to yield a potential 500 million euros (or $537 million) hit to operating profit.
In the second and third quarters, Adidas carried out two successful Yeezy drops. Including the impact of those sales, Adidas said it now expects loss related to Yeezy inventory to cost the company closer to 300 million euros, down from the previously outlined 500 million euros. Total one-off costs this year are still expected to total 200 million euros, as previously expected, which translates to a total projected operating loss of 100 million euros in 2023, down from the previously expected 450 million euros.
Gulden reaffirmed Adidas’ decision to part ways with West and said there are no plans to resume the Yeezy partnership.
“The decision that Adi took to end the relationship was correct,” he said. “What he said was not acceptable and there is no plan to go back and do business together again.”
The decision to halt Yeezy drops comes amid a global surge in anti-semitism against the backdrop of Israel-Hamas war. Gulden did not reference this directly with regard to Adidas’ Yeezy plans, but noted that Adidas has participated in donation programs to help people in Israel and Gaza.
