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October 25, 2022

Adidas expects EUR250m loss for ending Kanye West partnership on antisemitism

German sports brand Adidas has terminated its Yeezy partnership with rapper Kanye West effective immediately due to his antisemitism, but expects a EUR250m (US$246.55m) loss on its net income in the short-term.

By Laura Husband

Adidas has announced it has ended its Yeezy partnership with Kanye West as it does not tolerate antisemitism or any other sort of hate speech, however the decision could result in a EUR250m loss on net income given the fourth quarter is the season for festive gifting.

Adidas said: “After a thorough review, the company has taken the decision to terminate the partnership with Ye immediately, end production of Yeezy branded products and stop all payments to Ye and his companies. Adidas will stop the adidas Yeezy business with immediate effect.”

The company added: “This is expected to have a short-term negative impact of up to EUR250m on the company’s net income in 2022 given the high seasonality of the fourth quarter.”

Adidas has made the decision to take the hit financially as it is keen to show consumers that Ye’s (Kanye West’s) recent antisemitism-based comments and actions have been unacceptable, hateful and dangerous, and they violate the company’s values of diversity and inclusion, mutual respect and fairness.

Adidas is the sole owner of all design rights to existing products as well as previous and new colourways under the partnership.

Adidas said more information will be given as part of the company’s upcoming Q3 earnings announcement on 9 November 2022.

GlobalData apparel analyst Darcey Jupp told Just Style exclusively this was a good move for the brand.

She said: “Adidas’ decision to put its company values ahead of its successful Yeezy partnership will be beneficial to the sportswear giant in the long run, even if its financials are strained in the near future.”

She pointed out that consumers are becoming more aware of fashion brands’ ethical impact on society, and are willing to cease shopping at particular brands and retailers if they prove to support damaging practices and individuals.

Nevertheless, she added: “Adidas is already in a precarious financial position, with both profits and revenue slipping amid various macroeconomic challenges and its lack of competitiveness in the sportswear market, so the estimated short term negative impact of up to EUR250m on FY2022 net income will be a hard pill to swallow for Adidas.“ 

Last week Adidas posted a 4% increase in currency-neutral revenues for the third quarter, however the German sporting company lowered its full year 2022 guidance.

Today’s announcement follows the company becoming the subject of a week of civil action and protests globally over its “refusal” to take responsibility for workers’ rights in its supply chain.

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