Adidas has announced that it will offload the remaining Yeezy-branded footwear it has in stock in weekly tranches.
Adidas and Kanye West have officially cut ties over the latter’s public antisemitic statements. So, production of the Yeezy line of shoes was halted. However, the sports product company still has millions of Yeezy-branded shoes in stock.
It’s About to Go Down!
So, in late February, Adidas finally opted for a phased sell-off of the remaining stock of its Yeezy products. By the time the company has sold all of the Yeezy shoes, it is estimated that it would have earned $700 million.
For reasons we shall soon explain, every cent of the sales proceeds will go to Adidas’s coffers.
Mouthwatering Profit for Grabs
Adidas has revealed that the two million pairs of Yeezy shoes in its possession cost $290 million to produce.
The intent is to sell each pair for $230 and rake in approximately $430 million. By implication, Adidas would have lost $720 million if it had bowed to the sentiments trailing the unceremonious end of its partnership with Kanye West.
Damage Control
As we mentioned earlier, the termination of the Adidas-West partnership came as a salvage campaign for the brand reputation of Adidas.
In 2022, West was up and about spreading conspiracy theories and antisemitic views at every opportunity he had. Some of those statements were the buildup to his suspension on Instagram and Twitter, now X.
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West has since gone public with being diagnosed with bipolar disorder and, more recently, autism. However, mainstream media have not been forgiving of his extreme views.
Since then, Ye, as he is now addressed, has had to live with the consequences of his unpopular beliefs. It was on this ground that Adidas also ended their multi-billion deal with the rapper.
Donate An Entire Brand to Charity?
Initially, Adidas considered not selling the 2 million pairs of Yeezy shoes. At one point, the company considered giving the shoes to charity and removing the Yeezy branding on them.
However, Adidas later decided against these two options and opted to sell their shoes at the original intended price and with the Yeezy labels intact.
To the Raffle!
Adidas has since started a raffle on its website for customers who want to buy a pair of the remaining Yeezys.
The shoes are still in high demand, and second-hand pairs are still going for a premium price. So, the raffle ups a customer’s likelihood of getting a new pair, and at the official price.
Almost Like a Phased Yard Sale
Adidas decided to sell the Yeezy stock in 2023 and sold 40% of the inventory that same year. The official announcement of this year’s sales came in February.
Also, not all the different shoe types will be available at once. Each type will be raffled off in March and the weeks following.
Spurning All Sentiments
According to the February official announcement on Adidas’ website, the Yeezy Boost 350 steel gray would be the first to go on the raffle. Each pair of the Boost 350 is pegged at $230, which is the price it went for before Adidas dissolved its partnership with West.
The company will probably proceed with the sales of other products in the Yeezy line.
It’s Official, Adidas is Open for Business
Adidas’ announcement reads, “Today, Adidas began a further release of Yeezy inventory, with a range of existing products being available in phases over the coming weeks across the world.”
The statement also discredits any claim of Yeezy shoe sales on any other platforms besides the Adidas app and their official website, adidas.com.
Terms and Conditions Apply
Unfortunately, anyone who was unable to sign up for the sales raffle up until February 29 may be unlikely to participate when it fully commences.
According to John Kernan, an analyst with Cowen, “There’s still demand for that Yeezy silhouette in the marketplace.” So, Kernan doesn’t find it surprising that Adidas will be obliging customers.
Still In Popular Demand
Based on Adidas’s public figures, Kernan affirms that the Yeezy brand has become a major selling point for the sports company.
“That brand was generating an enormous percentage of their overall operating profit for several years,” Kernan said. Last summer alone, Adidas made a $540 million profit from selling 40% of its Yeezy inventory
A Task for A New Leader
Bjørn Gulden, the CEO of Adidas, was not in the mix of the company’s partnership with West. The deal had already been cancelled before he came on board. Gulden was the CEO of Puma and only joined Adidas after the Ye crisis had already played out.
There are speculations that this disconnect is the reason Gulden did not entertain any sentiments about selling off the Yeezy inventory and surpassing Adidas’ 2023 earnings projections.
Avoiding Sentiments in Business Decisions
Gulden admitted that the Yeezy inventory was the first major decision he had to make after joining Adidas as the CEO.
He said the first cue of the company’s management was to write off the brand to avoid any form of bad press. However, Adidas had a lucky streak of sales. It turned out that the Yeezy brand was still popular with customers.
Hoping for the Best
After making $540 million from selling 40% of the Yeezy inventory, Gulden is hoping that raffling off the remaining 60% would turn out as good.
However, the CEO did suggest that the shoes are likely to sell at their cost price, but the official listings seem to indicate otherwise. Adidas is still selling at the label price and would be milking the brand of all the profit it can get.