Adidas sold $400 million in Yeezy shoes last quarter, the same as the previous year before Kanye West’s antisemitic outbursts.

Adidas sold $400 million in Yeezy shoes last quarter, the same as the previous year before Kanye West's antisemitic outbursts.

The sneaker world was rocked when Adidas announced its decision to sever ties with rapper and designer Ye, formerly known as Kanye West, due to a series of antisemitic remarks he made. This unexpected fallout left approximately €1.2 billion worth of Yeezy sneakers in limbo. However, despite this setback, Adidas has managed to turn lemons into lemonade by selling off its stockpiles and increasing its financial targets for the year.

The success of this strategy was manifested in the recent announcement that revenue from Yeezy was roughly in line with the same period last year, prior to the fallout. In fact, Adidas shares experienced a 1.3% increase in early Frankfurt trading. This positive outcome has prompted the company to commit to donating a significant amount of Yeezy proceeds to organizations working to combat discrimination and hate.

Under the leadership of new Chief Executive Officer Bjorn Gulden, Adidas is determined to thrive amidst a series of recent crises. Gulden recognizes the importance of creating a buzz around the brand and is focusing on hot-selling sneakers and apparel. While the Yeezy fallout has presented challenges, Gulden remains optimistic about Adidas’s business performance, stating that excluding Yeezy, the company has performed slightly better than expected.

To further drive growth, Adidas is planning to release larger volumes of classic sneakers like the Samba and Gazelle into the market. These iconic styles have the potential to generate significant buzz and increase the brand’s appeal.

However, it is important to acknowledge that Adidas still faces significant challenges. The threat of a recession looms in North America and Europe, where sales fell in the second quarter. Additionally, the strength and sustainability of the rebound in China, where sales grew by 16% in the quarter, after two years of declining demand, remain uncertain.

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In light of these challenges, retailers have become more cautious in their early orders, given the persistently high inventory levels of sneakers and apparel in the market. This cautious approach highlights the need for Adidas to continue adapting its strategies to meet changing market dynamics.

Given the current landscape, Gulden has positioned 2023 as a rebuilding year for the company. He is hopeful that by making the necessary improvements, Adidas will be well-positioned for a positive and profitable trajectory in 2024 and beyond. Through a combination of innovative products, strategic partnerships, and a commitment to addressing societal issues, Adidas aims to secure a bright future in the highly competitive sneaker industry.