Adidas AG’s new Chief Executive Officer Bjorn Gulden is mulling the idea of selling Yeezy products and donating the profit to charity, as he tries to offset some of the huge financial hit from the collapse of the alliance with rapper Ye.
(Bloomberg) — Adidas AG’s new Chief Executive Officer Bjorn Gulden is mulling the idea of selling Yeezy products and donating the profit to charity, as he tries to offset some of the huge financial hit from the collapse of the alliance with rapper Ye.
The last of the Yeezy products, some of which only recently arrived at Adidas warehouses, have a retail value of €1.2 billion ($1.3 billion), showing the immense success of the partnership.
Gulden ruled out other options, such as burning them, giving them away for free in countries such as Turkey and Syria, or rebranding them. He was speaking in his first press conference since taking over the German sneaker brand after the ouster of former CEO Kasper Rorsted.
“There are so many people that have an interest in this from different communities from around the world,” he said. “I’ve only been involved in this for seven weeks, and I don’t feel qualified to make a decision based on the facts I have.”
Adidas cut ties with Ye, formerly known as Kanye West, in October after he unleashed a string of hateful and antisemitic rhetoric.
Sorting out the aftermath of the line is Gulden’s biggest challenge. After ending the deal, Adidas decided to keep accepting shipments of Yeezy gear from suppliers that were already working on it. All the Yeezy products have recently arrived at Adidas’s warehouses, and the fact that the shoes are dispersed all over the world also complicates the issue, Gulden said.
The shoe industry is already suffering from an excess of unsold goods in general.
Ye would need to be paid if the inventory is sold, according to the royalty agreement, the CEO said. Adidas probably won’t earn anything, though it may recoup some of its costs, which are about €500 million.
No Rebranding
Another option would be recycling some products into other materials, such as soccer pitches. Gulden rejected the possibility of Adidas removing the Yeezy labeling or stitching on the products and then putting them up for sale.
“Trying to hide what it is is not very honest,” he said. “That’s not an option.”
The Norwegian, who became CEO in January, said he can’t set a deadline for a decision. In its annual report issued Wednesday, Adidas said there’s only a 15% to 30% chance that the company finds a way to sell the remaining Yeezy products.
Adidas knows whatever decision it makes, it will anger some groups, but it’s hoping to forge a plan that will make the majority of people happy, Chief Financial Officer Harm Ohlmeyer said in an interview.
Gulden said the company isn’t in talks with anyone to sell the goods.
“The inventory is there, it’s not running away,” he said. “We should not do a decision just to please someone. We should do a decision when the consequences of that decision are the most positive that we can do.”
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.