Adidas might SELL $1.3BN of Yeezy products – and PAY Kanye royalties

New Adidas chief says firm might still SELL $1.3BN of Yeezy products, donate profits to charity – but PAY Kanye for them as it faces first annual loss in 31 years after dropping anti-Semitic rapper

• Adidas CEO Bjorn Gulden, who took the helm in January, said on Wednesday the company could sell its $1.3 billion Yeezy stockpile and donate the profits
• Kanye West, who was dropped by the company over anti-Semitic remarks, would take a cut under his royalties deal, Gulden said 
• The Adidas chief ruled out destroying the products or giving them away

Adidas appears closer to selling a $1.3 billion stockpile of Yeezy products that’s been languishing in warehouses since the brand cut ties with Kanye West – and the anti-Semitic rapper could earn millions in royalties under the plan.

CEO Bjorn Gulden is considering selling the sneakers, which can retail for more than $700 per pair, and donating the profits to charity.

The brand would be unlike to earn anything from the sales, but it could help recoup the $500 million it spent on the stock.

Gulden accepted on Wednesday that West would probably also be owed money through the royalty agreement – something that would likely prove hugely controversial.

The disgraced rapper was dropped by Adidas and a string of other brands after a spate of anti-Semitic outbursts that started last October when he threatened to go ‘def con 3 on Jewish people’.

Adidas CEO Bjoern Gulden told the company’s annual news conference on Wednesday (pictured) that its $1.3 billion stockpile of Yeezy products could be sold, with the profits donated to charity

Adidas dropped Kanye West after the rapper’s series of anti-Semitic outbursts last year – and the scandal has turned into a corporate nightmare which will likely cost the company hundreds of millions of dollars

The scandal became a corporate nightmare for Adidas, whose tie-up with West was worth billions of dollars. Adidas revealed in its full-year results on Wednesday that it’s braced for losses of around $740 million in 2023 – which would be its first operating loss in 31 years.

Gulden has ruled out destroying the Yeezy stock, which was considered a possibility as recently as last week, and giving it away for free to impoverished and disaster-hit countries.

Yeezy stock worth hundreds of millions of dollars is collecting dust in warehouses after Adidas dropped Kanye West over his anti-Semitic outburst

He also ruled out removing the Yeezy logos from the stock and rebranding it.

‘Trying to hide what it is is not very honest,’ said Gulden, who took the helm in January. ‘That’s not an option.’

‘There are so many people that have an interest in this from different communities from around the world,’ he said of the dilemma.

‘I’ve only been involved in this for seven weeks, and I don’t feel qualified to make a decision based on the facts I have.’

Ruling out destroying, rebranding or giving away the Yeezy stock leaves little option but to sell it.

Potentially not selling the apparel and shoes linked to West would lead to a revenue loss of $1.3 billion, Adidas said.

‘Should the company irrevocably decide not to repurpose any of the existing Yeezy product going forward,’ it would have to write-off the entire inventory, it said.

Kanye West would earn royalties if Adidas sold the Yeezy stock, Gulden said. That would prove highly controversial following the rapper’s vile anti-Semitic outbursts

Yeezy sneakers sold for upwards of $700 a pair. Adidas CEO Bjorn Gulden has ruled out selling its stockpile without the Yeezy branding and the company also won’t destroy the products

Gulden said the company will use 2023 as a ‘transition year to build the base for 2024 and 2025’.

‘We need to reduce inventories and lower discounts. We can then start to build a profitable business again in 2024,’ he said.

Next year is shaping up to be a key one for sporting apparel companies, with both the European football championships and the Olympic Games taking place.

Adidas on Wednesday also said net profit fell heavily by 83 percent to $268 million in 2022, confirming preliminary results released in February.

Besides its woes over the Yeezy line, it was also facing ‘elevated recession risks in Europe and North America as well as uncertainty around the recovery in Greater China’.

‘The company’s revenue development will also be impacted by the initiatives to significantly reduce high inventory levels,’ it added.

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