Adidas will continue to sell Kanye West’s shoe designs without the Yeezy name
Adidas (ADDDF) ended its sneaker partnership with Ye, formerly known as Kanye West, last month after the musician’s anti-Semitic tirade. But Adidas (ADDDF) will continue to sell the lucrative line of sneakers and apparel, stripped of the Yeezy name and brand.
The company said it is the sole owner of all design rights to the Yeezy line for existing and future colors and versions. Selling the sneakers under Adidas’ own brand will save the company an estimated $300 million in royalty payments and marketing costs.
“Going forward, we will leverage existing inventory with the exact plans being worked on as we speak,” Adidas Chief Financial Officer Harm Ohlmeyer said Wednesday.
The Yeezy line was a key product for Adidas and the fallout hurt the company.
Yeezy products generated nearly $2 billion in sales last year for Adidas, accounting for 8% of the company’s total sales, according to Morgan Stanley. The line also helped Adidas secure shelf space at major retailers and brought in new customers to stores who purchased other Adidas products.
The end of the partnership cost Adidas more than $250 million in profits and $500 million in lost revenue, the company said Wednesday.
On Tuesday, Adidas announced it was appointing a new CEO, tapping the Puma chief to succeed outgoing CEO Kasper Rorsted.
Norwegian Bjørn Gulden, 57, will become CEO of Adidas next year. He will have to find ways to replace Yeezy’s sales and turn the brand around. Adidas shares have fallen around 80% over the past two years.
It would be a mistake for Adidas to continue selling the line, said Darcey Jupp, apparel analyst at GlobalData.
“He should refrain from re-launching items under his own brand, as they will always be synonymous with West, and that would likely lead to muted customer demand,” he said in a note to customers.