Adidas isn’t done paying for its relationship with controversial musician and former billionaire Kanye West.
After West’s antisemitic remarks caused an understandable uproar in 2022, the German brand cut ties with the rapper and with Yeezy, the sneaker and streetwear label it produced with him. It also stopped selling unsold merchandise, a decision that’s projected to cost the company over half a billion dollars.
Adidas saw a 20 percent drop in sales in the United States when it stopped selling Yeezy wares, but the largest loss is what is currently sitting in the warehouse. The inventory it can’t move is worth a whopping $551.5 million. Adidas is also suffering a “one-off” loss of $220 million according to Forbes, but it’s unclear whether that’s related to the decision to cut ties with West.
Adidas isn’t the only company that ended its contract with the embattled West in the wake of the backlash. Gap, Balenciaga, and Footlocker swore off working with him. JP Morgan Chase also ended its relationship,
Worsening matters, a group of enraged Adidas investors filed a lawsuit against the brand at the end of April. The suit claims that Adidas never warned them of West’s erratic behavior and antisemitism. The court filing reads, “Kanye West made antisemitic comments in front of Adidas staff, and even suggested naming an album after Adolf Hitler; Adidas was aware of his behavior, and failed to warn investors.”
The Wall Street Journal found in November that Adidas executives were made aware of the behavior back in 2018, but chose to overlook the risks because of Yeezy’s tremendous success.
Forbes reported that Adidas CEO Bjorn Gulden said, “2023 will be a bumpy year with disappointing numbers.” Despite the massive losses, the brand finished out the first quarter with a $66 million profit, a better-than-expected result.