Adidas scores a hit with first batch of unsold Yeezy shoes
German group received more than €500mn of orders in online sale after severing ties with Kanye West
Sneaker aficionados have snapped up the first batch of Yeezy shoes sold by sportswear giant Adidas since the end of its ill-fated partnership with Kanye West, cutting the risk that the group will have to take a big writedown on its remaining stock.
Adidas stopped selling Yeezy sneakers in October after terminating its highly profitable agreement with fashion designer and rapper West — now known as Ye — after he made antisemitic remarks.
In May, the company announced it had decided to sell some of its outstanding Yeezy inventory because destroying it would force the company to write off another €500mn.
Adidas has said it will donate a significant portion of the proceeds to charities that combat racism and antisemitism.
According to people familiar with the matter, demand at the first online sale of Yeezy shoes, which was spread over the end of May and the start of June, exceeded the company’s most optimistic forecast.
By June 2, towards the end of the sale, Adidas had received orders worth more than €508mn for 4mn pairs of sneakers, the people said. The strength of demand meant Adidas was unable to meet all the orders, particularly for certain sizes and models, they added.
Customers were required to register online in advance and submit their orders for specific models. While the value of the orders received was more than €508mn, the net sales were lower, the people said.
The robust demand has dispelled fears at Adidas’s headquarters in Herzogenaurach that Ye’s antisemitic outbursts and the lack of marketing for the shoes over the past six months would have made the Yeezy brand too toxic.
After joining forces in 2015, Ye developed into an important partner for Adidas.
By 2022, Yeezy generated €1.7bn in sales and close to €700mn in operating profit.
The world’s second-largest sports brand warned earlier this year that it may have its first operating loss in 31 years. It will report quarterly results on August 3.
“Adidas will probably have to update their revenue and profit guidance to reflect the initial sale of Yeezy inventory,” said Thomas Chauvet, head of luxury and sporting goods research at Citibank, adding that signs of strong demand for the unsold Yeezy shoes would be welcomed.
In its first sale, the company offered 15 different Yeezy models, including a large number of cheaper sliders as well as a few pricey models, according to people familiar with the matter. The popular 500 Utility Black, which fetch an average of €268 a pair on online reseller platform StockX.com, sold in Europe within hours, they added.
Within the company, discussions over how much it will donate to individual charities are ongoing, the people added. In a first step, five charities in the US and China, including the Anti Defamation League and the Philonise and Keeta Floyd Institute for Social Change, have been chosen. Making donations of more than €8.5mn across the five charities has been discussed but no decision has been made, the people said.
However, the final amount donated from the inventory sales will be far bigger as Adidas is prepared to pay out a “significant share” of the profit from the Yeezy inventory, the people said.
Adidas declined to comment, pointing to the quiet period ahead of its half-year results.
Adidas also plans to use proceeds from the inventory sale to pay royalties to Ye and meet costs stemming from the ending of the partnership, including laying off staff, closure of production capacity and legal costs.
Chief executive Björn Gulden said in March that Adidas would “probably not make profit” on its remaining Yeezy inventory.