The sale of Yeezy merchandise generated around $437 million (AU$655m) in revenue for Adidas in the second quarter of 2023, according to the company’s latest earnings report, as the sports apparel giant sells remaining stock of the brand linked to rapper Kanye West, with whom the company snapped ties last year following a series of the musician’s antisemitic outbursts.
Adidas began selling off its remaining inventory of Yeezy merchandise in June.
Getty Images
Key Takeaways
- The company said its second-quarter revenue benefited from an “initial product drop” of its remaining Yeezy inventory.
- The $437 million worth of sales was “largely in line” with Yeezy sales during the same quarter last year, showing that the controversy around Kanye had done little to dampen interest in the Yeezy brand.
- All Yeezy sales during this quarter were carried out through the company’s website and app, resulting in the company’s “direct-to-consumer” revenue growing 16% year over year.
- Despite this, the company noted that its “discontinuation of the regular Yeezy business” still cost the company around $437 million (€400 million) in the first half of 2023.
- A potential write-off of the company’s remaining Yeezy inventory would cost the company a further $437 million (€400 million), slightly down from the estimate of $546 million (€500 million) in its first-quarter earnings.
Big Number
$491.5 million. That is the total operating loss the company is projecting for 2023 if all adverse scenarios, including taking a write-off on the remaining Yeezy inventory, materialize. Aside from the potential Yeezy write-off, the company is expecting an additional $218 million loss related to a “strategic review” of the company. This is down significantly from the company’s Q1 estimates of $771 million.
Tangent
The company unveiled its plan to sell some of its remaining inventory of Yeezy products in May, adding that a “significant amount” of money generated from the sales would be “donated to selected organizations working to combat discrimination and hate, including racism and antisemitism.”
Key Background
Last year, Adidas and several other major brands severed ties with West after the rapper made a series of antisemitic comments on social media. West’s remarks resulted in his accounts being banned from nearly all major social media platforms. West later appeared on various podcasts, where he doubled down on his remarks and even praised Adolf Hitler. The loss of nearly every major brand deal caused the rapper’s fortune to shrink significantly. West dropped out of Forbes’ billionaires list and according to our estimates, his current net worth stands at $400 million.
This article was first published on forbes.com and all figures are in USD.
