German company Adidas You still don’t know what to do with yours stock of unsold Yeezy shoes – valued at $1.3 billion – after cutting ties with rapper Kanye West last year over anti-Semitic comments.
Bjorn Gulden, CEO of the multinational, outlined the company’s expensive dilemma during a call with analysts on Wednesday, and noted that options available to Adidas, such as rebranding the shoe or even literally burning Yeezy inventory, have significant drawbacks.
“Depending on who you talk to, people will say you can’t destroy because it’s a sustainability issue, right? So please don’t destroy. “And then those who say: ‘Please do not sell because you have reputation issues‘ said Gulden.
“That’s why we haven’t made a decision on it, because it’s a very complicated issue,” Gulden added.
The Yeezy imprint was one of the most profitable segments of Adidas’ business until last year, when the brand quickly severed ties with West, who legally changed his name to Ye, after a series of bizarre anti-Semitic rants.
The German sportswear giant has warned it will take a whopping $527.5 million in profit this fiscal year if it doesn’t sell its remaining Yeezy gear.
A messy break with West contributed to Adidas’ poor performance in the fourth quarter, which realized a net loss of 540 million dollars. In any case, the company ended 2022 with an attributed net profit of $651 million.
Gulden said Adidas would face a “huge reputational risk” if it tried to rebrand and sell Yeezy merchandise. “The flip side is if we say burn it or do whatever it takes to destroy it, and it disappears, then you have another problem.“, he added.
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Other options available to Adidas include selling Yeezy inventory “at cost.”meaning that the brand would not profit from the products, trading them at a small margin and donating the proceeds to charity.
Gulden also questioned the feasibility of simply donating yeezy sneakers victims of the earthquake in Turkey or some other worthy cause. He suggested that high-end products would end up on the resale market.
“If you’ve done that, they’ll come back because the value of the product is not the physical value of the ingredients, it’s the premium because it’s a brand and a commodity that’s sold at a high price,” Gulden said.
Source: Eluniverso
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