Adidas Brand Is 'Hurting' After Cutting Ties With Kanye West

When Adidas cut ties with Kanye West, the brand saw it as the right PR decision. But it might not have been the best business decision.

Adidas ended its partnership with Kanye West in October after he claimed a Jewish cabal was using its influence to undermine him.

While the brand didn't want to remain associated with someone labeled anti-Semitic, it's still stuck with all of his inventory. Adidas said they will not sell the Yeezy shoes over fear of public backlash.

But the Q1 earnings report released this week revealed Adidas saw a 20 percent sales decline in North America. Sales were down only 5 percent excluding Yeezy.

"The decline in Lifestyle and the loss of Yeezy are of course hurting us," Adidas CEO Bjørn Gulden said in a statement Friday.

(Photo by Jeremy Moeller/Getty Images)

But if you can't sell the shoes, what do you do with them?

Adidas is now stuck with $1.3 billion worth of unsold Yeezy shoes.

And Gulden told AP that Adidas reported a $441 million loss in sales at the start of 2023.

On a conference call, Gulden said the company is "getting closer and closer to making a decision" on what to do with the sneakers.

But company officials initially believed they could recoup the "vast majority" of losses by rebranding the shoes and selling them at a discount.

And although the possibility of burning the shoes has been thrown around, Gulden says he is "trying to avoid that."

"Depending on who you speak to, people will say you cannot destroy because it’s a sustainability issue, right? So, please don’t destroy," he said. "And then, those who are like, 'Please don’t sell because you have a reputation issue.'"

However, if the $1.3 billion worth of stock goes unsold, Adidas could be looking at a $552 million profit loss this fiscal year.

And Gulden seems to have come to terms with that.

"2023 will be a bumpy year with disappointing numbers," he said in Friday’s statement.

But since the company is so worried about public perception (and they're probably going to have to eat the cost anyway), I have an obvious humanitarian solution.

Rather than destroying the unsold inventory, Adidas should donate the footwear to those in need. Maybe even to the poor folks working in the Nike sweatshops.

Now THAT is a PR move.