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It’s been almost seven months since Adidas parted ways with Ye, and boxes of the popular Yeezy shoes are still stacked in the warehouse.
The fate of 1.2 billion euros ($1.78 billion Cdn) of unsold Yeezy shares is weighing on the German sports company as it tries to make a turnaround from the loss of its lucrative sneaker line and the ongoing fallout from its ties to musicians and musicians. . fashion designer.
Adidas is “getting closer and closer to making a decision” about what to do with its sneakers and “the options are getting narrower,” new CEO Bjorn Gulden said in a conference call on Friday, after reporting 400 million euros ($593 million Cdn) in lost earnings. sales at the beginning of the year.
But with “many interested parties” involved in discussions, no decision has been made, he said.
Adidas is stuck with a pile of flagship Yeezy brand shoes after ending its relationship with Ye in October over antisemitic and other offensive comments on social media and in interviews.
Gulden, who became CEO in January after the separation of Ye, refused to say that the destruction of shoes has been ruled out, but the company is “trying to do it.”
He has previously said that other options have drawbacks – selling sneakers means paying royalties to Ye, remaking them to remove brand identification would be dishonest and giving to people in need can lead to resale because of the high market value.
Gulden will not say how many pairs of Yeezy shoes Adidas stuck holding, “because then consumers will know how many we have and that can have an impact on demand.”
Losing the Yeezy brand “definitely hurts us,” Gulden said in a statement. The split will cut earnings by as much as 500 million euros ($740 million Cdn) this year if Adidas decides not to sell its remaining Yeezy stake, the company said.
Sales stumble
The company faces other issues related to Ye. Investors sued Adidas last week in the US, saying the company knew about Ye’s offensive comments and dangerous behavior years before the split and failed to take precautionary measures to limit financial losses.
The lawsuit – representing people who bought Adidas securities between May 3, 2018, and February 21, 2023 – pointed to a 2018 comment in which Ye proposed slavery as a “choice” and reports Ye made antisemitic statements in front of Adidas staff.
The company said last week that it rejects “these baseless claims and will take all necessary steps to vigorously defend itself.”
Ending the Ye partnership also cost Adidas 600 million euros ($887.7 million Cdn) in lost sales in the last three months of 2022, helping the company to a net loss of 513 million euros ($758.9 million Cdn).
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