This breakup is going to hurt.
Adidas is set to lose over $1 billion in sales after dropping Ye, formerly known as Kanye West.
In October last year, the global brand announced that it would be cutting ties with the 'Gold Digger' rapper after his antisemitic remarks.
As per CNN, Ye said that he "can say antisemitic s*** and Adidas cannot drop [him" during a hateful tirade against Jews on the Drink Champs Podcast. He also took to Twitter and threatened to "Go death con 3 on JEWISH PEOPLE."
At the time, Adidas initially released a statement explaining that they had put their nine-year partnership with Ye under review before terminating it with "immediate effect."
The sportswear maker said it "does not tolerate antisemitism and any other sort of hate speech" and said that his comments were "unacceptable, hateful and dangerous." Adidas also said that the remarks violated the company’s "values of diversity and inclusion, mutual respect and fairness."
However, just a few months later, it seems as though they are set to pay a heavy price for their decision.
On Thursday, the company warned that it’s expected to lose $1.3 billion in revenue this year because it’s unable to sell the former designer’s Yeezy products.
In a report, it was outlined that while the company "continues to review future options for the utilization of its Yeezy inventory, this guidance already accounts for the significant adverse impact from not selling the existing stock."
Initially it was said that Adidas would be re-selling the stock without the Yeezy logo or branding which would have saved them some major bucks, but the actual re-purposing of the stock is taking it's toll with an analyst telling CNN that "There really are no good options for this distressed brand that sat somewhere between prestige and luxury."
Not only is the former Yeezy inventory causing issues, Adidas is also expecting a "one-off cost" of up to $213 million as part of a strategic review.
"The numbers speak for themselves," said Adidas' CEO Bjørn Gulden. "We are currently not performing the way we should. 2023 will be a year of transition to set the base to again be a growing and profitable company.
"We will put full focus on the consumer, our athletes, our retail partners and our adidas employees," he continued. "Together we will work on creating brand heat, improve our product engine, better serve our distribution and assure that adidas is a great and fun place to work. adidas has all the ingredients to be successful: A great brand, great people, fantastic partners and a global infrastructure second to none."
"We need to put the pieces back together again," Gulden added. "But I am convinced that over time we will make adidas shine again. But we need some time."
Let's hope they manage to pull it back because that's one hefty fine for the brand.
