Adidas CEO Bjørn Gulden firmly rejects the idea of selling Yeezy products without the Yeezy name, which was suggested after ending the partnership with Kanye West last year. During an earnings call, Gulden emphasized that the Yeezy product was created by Kanye West, and the company’s strategy doesn’t involve selling his designs without the Yeezy brand. Adidas aims to manage the aftermath, clear inventory, and eventually build a business without Yeezy.
The first sale of Yeezy products brought in about 400 million euros (approximately $441 million), contributing 20% of the Yeezy inventory’s total sales. Adidas also reduced costs associated with writing off inventory by about 100 million euros. Despite this success, Gulden cautioned against assuming strong sales and profits in the future due to the uncertainties surrounding each product drop.
Adidas’ second-quarter earnings aligned with expectations after raising annual guidance. Revenue fell 5% in the quarter, with North America sales down 16%, partially offset by Yeezy inventory sales. Without Yeezy, North America sales would have declined by 20%. Gulden highlighted that the core adidas business performed slightly better than expected, with improved sell-through and gross margin.
The company maintains its guidance for an annual operating loss of 450 million euros, revised down from 700 million euros. However, this doesn’t account for the sale of additional Yeezy merchandise set to release in August. The absence of Yeezy as a vital revenue stream poses a significant challenge for Adidas’ future, according to GlobalData apparel analyst Alice Price.
Price further pointed out that Adidas’ second drop of Yeezy merchandise is a short-term solution, as the brand has lost some of its identity and relevance in the market, lagging behind competitors in innovation and product offerings.
In conclusion, Adidas remains committed to managing the transition away from Yeezy products while focusing on building a successful business. The challenges ahead require the company to rethink its strategy, innovate, and recapture its position in the competitive market.
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Source: Retail Dive
