Adidas is looking to repurpose its Yeezy-branded products after cutting ties with the brand’s affiliated rapper Kanye West.
Key Details
- Adidas canceled its business relationship with rapper Kanye West because of his anti-semitic remarks on social media, and now the company is trying to rebrand the shoe line without taking too many losses.
- Adidas stopped Yeezy product production and all payments being made to Ye, formerly known as Kanye West, in October, but the company is unsure what to do with the remaining products.
- Not selling the remaining Yeezy products will cut Adidas’s full-year revenue by about $1.28 billion and its operating profit by about $533 million.
- Experts say the company should choose one of three options: remove the Yeezy label and sell at U.S. discount stores, sell the products in small markets outside of the U.S., or donate the products because destroying them would be a bad move.
Why it’s news
Adidas officially canceled its business relationship with rapper Ye in October because of his anti-semitic remarks on social media, but the decision has cost the company a large amount of money.
After cutting ties with Ye, the company immediately stopped production of all Yeezy products, but Adidas was left with an abundance of products and no plan for what to do with the remaining inventory.
Not selling the remaining Yeezy products will cut Adidas’s full-year revenue by about $1.28 billion and its operating profit by about $533 million.
Many experts have weighed in on what direction Adidas should go. One idea was to remove the Yeezy label and sell at Adidas discount stores in the U.S. Many say this is the company’s best option, but it would cost money to remove all of the identifying labels costing more money.
Yeezy products also have a distinct look, and many people think that regardless if the Yeezy label is gone, many consumers will still associate the products with the rapper.
Another option is to sell the products in smaller markets outside the U.S. The company could sell the products in smaller, developing countries to not hurt the brand’s reputation while also making a profit.
The last option would be donating the products. Many businesses destroy products, but that can have harmful consequences as there is nothing wrong with the products other than the ties to the controversial rapper.
Instead of destroying the products, Adidas could donate them, which would be good for the brand/s reputation and sustainability, but would not make up for the loss of revenue.
