From sales star to bogeyman - Adidas solves Kanye West problem

The Adidas Group wants to continue selling parts of the stock of the products of the "Yeezy" series, which were launched together with rapper Kanye West, even after the separation from the controversial musician. © Seth Wenig/AP/dpa

The cooperation between Adidas and Kanye West initially looked like a real coup. But then the scandalous rapper plunged the sporting goods company into a real crisis with intolerable statements.

Herzogenaurach - Adidas once celebrated the rapper Kanye West as a brilliant designer - and above all as a revenue generator that had hardly been seen in Herzogenaurach before. He got "big eyes", admitted CEO Björn Gulden, when he was still at rival Puma and saw what was going on at Adidas and the US musician.

Until the musician's public statements became more and more extreme, his behavior towards employees more and more outrageous and the pressure on Adidas became greater and greater. Finally, in October 2022, there is a break: West has to go, but the problems he caused, including a huge pile of lifestyle products designed by him, remained.

Products will be resold

What to do with the things that fetched dream prices in stores, especially in the United States? Resell? The storm of indignation would have been predictable. Give away? This would have fostered an immense secondary and black market. Even the burning of the articles, which are highly appreciated by fans, was thought of - with a negative earnings contribution of 700 million euros as a result and a need for explanation in terms of sustainability. After highly complex discussions with shareholders, the solution finally came yesterday, which had been announced for days: The products will continue to be sold - at least for the time being. The money will be donated. The collector scene is already in the starting blocks.

"After careful consideration, we have decided to start selling some of the remaining Adidas 'Yeezy' products," Gulden said. The sale and subsequent donations were the preferred option for all organizations and stakeholders. "We believe this is the best solution because it values the designs and shoes produced, works for our employees, solves an inventory problem, and will have a positive impact on our communities," Gulden said. "Hatred of any kind has no place in sport and society, and we remain committed to the fight against it."

Loss of 24 million euros

Adidas immediately received applause for Solomon's solution to a difficult problem. "At a time when anti-Semitism has reached historic levels in the U.S. and is on the rise worldwide, we appreciate how Adidas has turned a negative situation into a very positive outcome," said Anti-Defamation League Chief Executive Jonathan A. Greenblatt. "The company has shown genuine prudence by partnering with community organizations dedicated to combating this vicious and persistent hatred." The U.S. organization, which campaigns against discrimination and defamation of Jews, is one of the recipients of the Adidas donations.

Nevertheless, star designer Kanye West, who has become a problem, has left considerable damage to Adidas. In the first quarter of 2023, a loss of 24 million euros is recorded, and there will be hardly any profit in 2023 as a whole. West has a significant stake in this. The shareholders already rebelled at the Annual General Meeting because a good part of their share value was lost, at least temporarily. Some of them refused to ratify the actions of the Executive Board and Supervisory Board. A class action lawsuit is pending in the U.S. Tenor: Adidas should have recognized earlier who the company is working with. And finally, the departure of CEO Kasper Rorsted was also overshadowed by the Western problem. Dpa