Adidas To Sell Off Yeezy Inventory, Donate Some Proceeds To Charity

Adidas is planning to sell off the unsold Yeezy inventory and donate some of the proceeds to charity, according to commentary at the company’s annual meeting initially reported by the Financial Times.

FT said the company was responding to investors chiding Adidas for the delays in finding a solution for the Yeezy stock and CEO Björn Gulden said the group had decided against destroying the shoes. Instead, it will over time “try to sell parts of the product” and donate some of the money to charities representing people who “were hurt” by West’s comments, he added.

“Burning several million pairs [of shoes] does not make sense,” Gulden told investors attending the company’s annual meeting on Thursday. He previously said that selling the remaining Yeezy stock would imply that West would receive additional payments from Adidas, saying in March that the company needed “to pay royalties, of course.”

Adidas last week reported its first quarter results and full-year guidance (see story here) and said at the time the discontinuation of the Yeezy business weighed on the top-line development during the quarter, representing a drag of around €400 million on the year-over-year comparison, mainly across the North America, Greater China and EMEA regions.

In addition, while the company continues to review future options for the utilization of its Yeezy inventory, it said at the time the guidance issued reflected the revenue loss of around €1.2 billion from potentially not selling the existing stock. Accounting for the corresponding negative operating profit impact of around €500 million, the company’s underlying operating profit is projected to be around the break-even level in 2023.

Should the company irrevocably decide not to repurpose any of the existing Yeezy product going forward, Adidas suggested that it would result in the potential write-off of the existing Yeezy inventory and would lower the company’s operating profit by an additional €500 million this year.

Selling off the inventory will mitigate much of that write-down and operating profit impact.