Adidas has reportedly been left with $1.3 billion in unsellable Kanye West stock that it will have to write off as a loss in the aftermath of severing its business ties with the disgraced rapper.
The clothing giant ended its relationship with West, now known as Ye, after the musician and fashion designer made a series of hateful antisemitism statements in late 2022. Adidas had predicted the decision would cause the company to lose $246 million but stressed it was the right move as it would “not tolerate” antisemitism and hate, Fortune reported.
But the sum has now been calculated at substantially more. After quickly shutting down production of Yeezy products and cutting all ties, the brand was still left with a massive stockpile of Yeezy inventory.
According to the report, a new financial document from the company examining "accounts for the significant adverse impact from not selling the existing stock” found that Adidas had lowered predicted revenues by $1.3 billion and operating profit by $536 million for 2023, which would place its operating profit at near zero.
Furthermore, writing off the massive loss of profit would cause Adidas to lose an additional $536 million in 2023. It also announced a one-time cost of as much as $214 million due to the end of its ties with West.
“The numbers speak for themselves," said Adidas CEO Bjørn Gulden, according to Fortune. “2023 will be a year of transition to set the base to again be a growing and profitable company. We will put full focus on the consumer, our athletes, our retail partners and our adidas employees. Adidas has all the ingredients to be successful: A great brand, great people, fantastic partners and a global infrastructure second to none.”
He added: “We need to put the pieces back together again but I am convinced that over time we will make Adidas shine again. But we need some time.”
Reacting to the announcement, shares of the sportswear company dropped 11 percent on Friday morning.
In late December, after a series of antisemitic outbursts, West was number one on the Simon Wiesenthal Center’s list of the top 10 worst antisemitic incidents of 2022.
The center’s annual “Top Ten Worst Global Antisemitic Incidents” list put West at the top spot as an example of “the influencers” who spread “classic tropes deployed by Jew haters – some dating back two thousand years.”
The Wiesenthal Center blasted West for contributing to “mainstreaming and expanding antisemitism when he had dinner with former President Trump along with extreme right activist Nick Fuentes.”
“Major social media platforms could have moved quickly to block the tsunami of hate based on their own terms of usage, but by and large they chose not to,” the Center said.