Fans of trendy Yeezy trainers have rushed to grab the first batch of Adidas' iconic shoes since the termination of its partnership with Kanye West, formerly known as Ye. The renowned sportswear giant halted Yeezy sales in October due to the fashion designer and rapper's controversial antisemitic remarks, which prompted the lucrative partnership's end.

In a strategic move, Adidas decided to offload some of its remaining Yeezy inventory rather than writing off a staggering €500 million. To the company's delight, the first online sale of Yeezy shoes, held from the end of May to the start of June, surpassed all expectations, with demand far exceeding the most optimistic forecasts.

By June 2, during the final days of the sale, Adidas had received orders amounting to over €508 million for 4 million pairs of trainers. Such strong demand led to supply shortages, particularly for certain sizes and models, resulting in unmet orders. While the value of the orders received reached €508 million, the net sales figure turned out to be lower.

The robust demand for Yeezy shoes defied concerns at Adidas's headquarters in Herzogenaurach that the brand's reputation had suffered irreparably due to Ye's antisemitic outbursts and the lack of marketing over the past six months.

The collaboration between Kanye West and Adidas had been remarkably successful since its inception in 2015. Yeezy became a crucial partner for the brand, contributing a substantial €1.7 billion in sales and close to €700 million in operating profit by 2022.

Notably, Adidas had previously warned of a potential operating loss this year, marking the first in 31 years. However, the strong response to the unsold Yeezy shoes may prompt the company to update its revenue and profit guidance positively.

Thomas Chauvet, the head of luxury and sporting goods research at Citibank, believes that signs of vigorous demand for the remaining Yeezy inventory would be well-received and could potentially enhance Adidas's financial outlook.

During the initial sale, Adidas offered 15 different Yeezy models, including both affordable sliders and higher-priced variants. The popular 500 Utility Black, which typically commands an average price of €268 per pair on online reseller platform StockX.com, sold out rapidly in Europe.

Regarding the charitable aspect of the inventory sale, Adidas is currently in discussions about how much it will donate to individual charities. Five charities in the US and China, including the Anti-Defamation League and the Philonise and Keeta Floyd Institute for Social Change, have been chosen to receive donations, with the potential for an aggregate contribution of more than €8.5 million. However, the final donation amount will be significantly larger, as Adidas intends to allocate a "significant share" of the profits from the Yeezy inventory.

Adidas plans to utilize the proceeds from the inventory sale to pay royalties to Kanye West and cover various costs associated with the partnership's termination, such as staff layoffs, production capacity closure, and legal expenses. The company's CEO, Björn Gulden, had previously stated that Adidas would likely not make a profit on its remaining Yeezy inventory.

Adidas declined to comment further, citing the quiet period leading up to its half-year results announcement. The company's performance during this period, especially the impact of the successful Yeezy inventory sale, will be closely watched by investors and industry experts alike.

source: https://www.ft.com/content/e904ca26-441a-490e-aa3a-905579a7534b