Adidas has a messy, overflowing closet these days.
After severing ties with the controversial rapper Ye (better known as Kanye West), the world’s second-biggest sports apparel brand has ~$750m worth of Yeezy-branded inventory it may never sell, setting up a rough year for the company.
Adidas anticipates a percentage drop in sales in the high single digits compared to last year — a total that could reach ~$2B, according to Business Insider.
Ye was a huge earner for the company
His Yeezys, which retail for $200+, were among the hottest shoes in the world, earning Adidas $1B+ annually in recent years.
But he’s not Adidas’ only problem. Its strategy over the last few years has centered on partnerships with other artists — like Bad Bunny, Pharell Williams, and Beyoncé — that haven’t always met financial expectations.
Bey’s Ivy Park clothing brand (a collaboration with Adidas) has struggled in recent times, per The Wall Street Journal:
- 2021 revenue was ~$93m
- 2022 revenue was ~$40m (vs. $250m projected)
- 2023 revenue is projected to be $65m — a far cry from an earlier target of $335m
What’s the next big thing in the shoe industry?
As one analyst explained, Adidas has struggled to find it, and newer rivals like Hoka One One and On may capitalize.
- Hoka, owned by parent company Deckers, reported a YoY sales increase of ~91%.
- On experienced a 50% YoY sales increase.
BTW: Adidas hired CEO Bjørn Gulden away from Puma last year, continuing a bitter rivalry that dates back to the founding of the companies by the Dassler brothers.
