German sportswear giant Adidas confirmed it plans to still use Yeezy designs as it continues to confront the fallout from a messy and costly split with Ye, the artist formerly known as Kanye West.
The company slashed its profit forecast for the fourth time this year as the end of its lucrative Yeezy partnership and falling demand for its products in China weighed on its third-quarter earnings.
Still, investors are more upbeat about the company than they have been since early October, when Ye released a “White Lives Matter” T-shirt at his controversial YZYSZN9 show in Paris and made subsequent antisemitic statements that saw him lose other brand deals and got him suspended from Instagram and Twitter. Adidas’ shares were trading up more than 2 percent early Wednesday, already buoyed by the announcement that Puma chief executive Bjørn Gulden will join the company in January.
Adidas also provided guarded updates on some of the big outstanding questions around the end of its Yeezy partnership on an earnings call Wednesday morning. The sneaker line accounted for as much as 8 percent of the brand’s annual revenue and Adidas has already said the termination will cut up to €250 million ($251 million) from the company’s net income this year,
Chief financial officer Harm Ohlmeyer, who will become interim chief executive when Kaspar Rørsted leaves the business on Friday, reiterated that the brand owns all IP, designs and colourways relating to the Adidas-Yeezy products — save for the Yeezy name itself — and “intends to make use of these rights” as early as 2023. He added that a dedicated team is working on various options for plans to “leverage the existing [Yeezy] inventory,” with further details to be provided at some point in 2023.
The brand declined to provide detail on how much of its unsold inventory is made up of Yeezy products.
The company anticipates savings of €300 million in 2023 in royalty and marketing payments that would have been paid to Ye and the Yeezy business, Ohlmeyer said Wednesday.
The Yeezy dispute is just one of a handful of long-term concerns affecting the business that Gulden will need to tackle when he begins his tenure as CEO at the beginning of 2023. Its shares are down around 50 percent since the beginning of the year.
Adidas now anticipates net income of €250 million this year, down from the brand’s previous target of around €500 million set in October (the pre-October forecast for 2022 was originally €1.3 billion).
Stay tuned to BoF for updates on this developing story.
