Despite numerous compelling collaborations this year, Adidas isn’t able to make up for the losses incurred with the discontinuation of Yeezy
It is hard to imagine that Adidas didn’t see this coming. The Three Stipes just shared their Q1 earnings result. Unsurprisingly, it isn’t rosy. According to Adidas’s chief executive officer Bjørn Gulden, who decamped Puma for Adidas early this year, the company suffered a loss of €400 million (or about S$594.6 million) year-on-year in the first three months of 2023. As reported by AP, Adidas admitted that the divorce between the brand and Kanye West is “hurting” them. Yet, things are not as bad as they seem due to “extraordinary demand” for the old-school kicks of Samba and Gazelle, both not easily found when you walk into Adidas stores here. These shoes are also known as ‘terrace’ style, first seen gaining traction in the ’80s among football fans on the bleachers. Adidas isn’t the only brand banking on this style. One of them that’s highly alluring is the New Balance URC30, recently reimagined by Junya Watanabe.
Adidas also revealed that the performance in North America was particularly bad as the termination of Yeezy footwear has impacted the market there, with a dip of 20% in sales. It did not say how Yeezy-no-more was received in South-East Asia (in North Asia, specifically China, business was not encouraging due to the COVID lockdown across several Chinese cities). Or, if the market for Yeezy was particularly large in this part of the world. At the recent Sneaker Con SEA, although the most visible brand was Nike, some indie sellers managed to score Yeezys, such as the Slide—which they claimed to be legit—for sale. Apparently there is still demand for Yeezys here and across the region, as a group of young sellers told us. And now that Yeezys are no longer available through Adidas, the demand via resellers is “still there”, which seemed to contradict reports that prices and demand have generally dropped. Some fans can indeed separate footwear and the disgraced creator.
The Adidas and Kanye West partnership was called off somewhat belatedly last year after the rapper-turned-designer made anti-Semitic remarks publicly, repeatedly. Sales of the shoes were immediately halted. It was reported that Adidas would continue selling Yeezys without the Yeezy branding, but nothing came out of that. Adidas did not announce what they would do with the massive stock of Yeezys—said to be worth a staggering €1.2 billion—that they won’t/can’t(?) sell (or destroy, or donate), but they did warn that it would affect operating profits by a dip of €500m this year. Although Kanye West may have “rescued Adidas”, as The Guardian put it, it does show that relying on a volatile celebrity with no verbal filter as the key driver of profits may not be worth it in the longer run. Destroying the stocks that cannot be sold is not an option that the maker of the Stan Smith could consider without being called out as wasteful and detrimental to the environment. It’d be fascinating to see what Adidas can do to deal with those tainted sneakers and not turning down what Mr Gulden called “brand heat”.
File photo: Jim Sim for SOTD