There was a surge in demand as sneaker enthusiasts rushed to get their hands on the latest Yeezy shoes released by sportswear giant Adidas, according to the Financial Times.
This marks the first batch of Yeezy shoes hitting the market since the brand’s partnership with Kanye West ended, mitigating the potential risk of a major write-down on remaining stock.
The decision to halt sales of Yeezy sneakers in October came after adidas terminated its once highly lucrative collaboration with the fashion designer and rapper, known as Ye, following his controversial antisemitic remarks.
In a strategic move, Adidas announced its intention to sell some of its outstanding Yeezy inventory in May, opting for a better alternative than writing off approximately €500m ($554m) worth of unsold stock. Part of this effort involved donating a significant portion of the proceeds to charities actively combatting racism and antisemitism, underscoring the company’s commitment to social responsibility.
It said it would utilise proceeds from the inventory sale to cover various costs, including paying royalties to Ye and addressing expenses related to the partnership’s termination, such as staff layoffs, production capacity closures, and legal fees. Previously, chief executive Björn Gulden had expressed concerns that Adidas might not profit from its remaining Yeezy inventory.
Sources familiar with the matter told the Financial Times that the response during the first online sale of Yeezy shoes, spanning the end of May and the start of June, exceeded even the most optimistic expectations. By 2 June, near the conclusion of the sale, Adidas had received orders totalling over €508m for 4m pairs of sneakers. The overwhelming demand led to supply shortages, particularly for specific sizes and models, resulting in some customers missing out on their desired purchases.
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This display of demand has reportedly laid to rest any concerns within Adidas’s headquarters in Herzogenaurach about the potential fallout from Ye’s previous antisemitic outbursts and the lack of recent marketing for the Yeezy brand. The collaboration between Adidas and Ye had previously proven immensely successful, with Yeezy amassing impressive sales of €1.7bn and nearly €700m in operating profit by 2022.
Earlier in the year, Adidas had issued a warning that it might face its first operating loss in over three decades, making the success of the Yeezy inventory sale a crucial development in its financial outlook.
Industry expert Thomas Chauvet, head of luxury and sporting goods research at Citibank, cited by the FT said, that Adidas might need to update its revenue and profit guidance to reflect the impact of the initial Yeezy inventory sale. The positive signs of strong demand for the unsold Yeezy shoes have been well-received by both analysts and investors, boosting confidence in the brand’s resilience.
Adidas declined to comment when approached by Just Style, adding it was in a quiet period ahead of publishing its half-year results.