By CultureBanx Team
- Adidas has $750M worth of Yeezy-branded inventory it may never sell, after breaking up with rapper Ye (aka Kanye West)
- Sales for Beyonce’s Ivy Park fell more than 50% to $40M in 2022, far below the $250M Adidas projected
The world’s second-biggest sports apparel brand Adidas (ADDYY +0.86%) has $750 million worth of Yeezy-branded inventory it may never sell, after breaking up with rapper Ye (aka Kanye West). Adidas faces its first loss in three decades if Yeezy’s in its warehouse go unsold. This has triggered a profit warning to investors as the brand tries to climb out of its billion dollar hole.
Why This Matters: Adidas anticipates a percentage drop in sales in the high single digits compared to last year, a total that could reach $2 billion, according to Business Insider. In its fourth profit warning in less than six months, it forecast a high single-digit percentage decline in sales this year. The German sportswear manufacturer estimates that choosing not to repurpose and sell the sneakers it created alongside rapper Ye, formerly Kanye West, would have a “significant adverse impact” on its bottom line.
Adidas’ main problem is its strategy over the last few years that has centered on partnerships with other artists including Bad Bunny, Pharell Williams, and Beyoncé that haven’t always met financial expectations. In fact, Beyonce’s inclusive streetwear collection Ivy Park has struggled in recent times, according to The Wall Street Journal.
Sales for Ivy Park fell more than 50% to $40 million in 2022, far below the $250 million Adidas projected. Specifically, in 2021 revenue was $93 million, in 2022 revenue was $40 million (vs. $250 million projected), and in 2023 revenue is projected to be $65 million, far from the target of $335 million. The existing contract between the musician and the brand, which pays the former $20 million annually, is set to expire at the end of this year.
What’s Next: Adidas is continuing to hunt for a hero collaboration to replace Ye. The company is still working with luxury brands like Gucci, Stella McCartney, and Prada.
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