Ties began severing left and right since Kanye West started to make controversial statements about the Jewish people.
Adidas Group announced on Tuesday that pre-existing Yeezy shoes will remain in stock. But exclusively with Adidas’ branding.
Adidas Says Goodbye to Ye
Reports from Morgan Stanley and RBC Capital Markets analysts indicate this change will come at the top of 2023. The partnership between Kanye West and Adidas was one of the shoe industries’ most successful and high earning. Now, it’s soon to be a thing of the past.
“Looking ahead, on our understanding, the company will not sell any Yeezy-branded products, and all Yeezy products will be branded under Adidas’s brand,” Morgan Stanley representative Edouard Aubin told clients Tuesday (Oct 25).
Outside of the hectic Kanye situation, Adidas has already been dealing with dissatisfaction from investors over lower sales in China and stalled production. Surprisingly enough, analysts reported that Kanye’s antisemitic rants and saving expenses might have motivated the end of the artist’s partnership with Adidas.
“Adidas has the rights to existing Yeezy product designs and can sell these using Adidas branding (not Yeezy branding) following the termination of the Yeezy partnership,” RBC analyst Piral Dadhania confirmed.
Specifically, Dadhania claimed the start of next year to begin the process. “Speaking to the company, it believes it can limit the loss of revenues through this strategy and will also save on expenses related to royalty and marketing fees no longer payable in 2023.”
Keeping The Brand Alive
Coinciding with these stunning announcements, Adidas also released a statement rejecting antisemitism and racism on Tuesday. The company stated its plans to end its journey with Kanye immediately. In addition to this, Adidas claimed that it halted all production of Yeezy products and payments to Kanye.
Notably, the German sportswear company stated that the Yeezy design rights belong to Adidas. “Adidas is the sole owner of all design rights to existing products as well as previous and new colorways under the partnership,” the company confirmed.
The quick termination won’t stop Adidas from taking a huge financial hit from the debacle. The company expects a $247 million negative impact on its yearly earnings following the Yeezy separation from Ye.
Since Kanye was initially set to stay partnered with them through 2026, this is a significant setback. Of course, Ye’s dicey comments led to a 3.2% fall in the German trading stock.
“We would expect to see further revenue, margin, and earnings consensus downgrades following this latest installment of bad news at Adidas,” Dadhania stated. “We are doubtful whether Adidas will be able to fully compensate for loss of Yeezy profits in 2023, which is likely to weigh on sentiment further in our view.”
Written by Dreema Carrington
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