Demand for Adidas's Yeezy sneakers exceeded expectations in their first online sale since the company ended its collaboration with Kanye West, now referred to as "Ye," according to Financial Times, citing people familiar with the matter. This reduces the German sportswear company's risk of a large writedown on its remaining stock.
Adidas received orders worth over 508 million euros for 4 million pairs of unsold Yeezy shoes at the end of May and early June. People familiar with the sale said the results "exceeded the company's most optimistic forecast." The goal of the sale was to avoid realizing a loss and to give some proceeds from the sale to charities that combat antisemitism and racism. The company also plans to use the inventory sale proceeds to pay royalties to Ye.
Adidas ceased the sale of Yeezy shoes from its now-ended partnership with Ye in October after the rapper made a series of antisemitic remarks. Ending the highly profitable sneaker line hit first-quarter sales by around $440 million. The company warned earlier this year that it may record the first operating loss in three decades.
"Adidas will probably have to update their revenue and profit guidance to reflect the initial sale of Yeezy inventory," said Thomas Chauvet, head of luxury and sporting goods research at Citibank. He said the strong demand for unsold Yeezy shoes is a good sign ahead of quarterly results on August 3.
Meanwhile, Adidas shares trading in Germany remain halved from August 2021 highs.
The people familiar with the sale said there's still internal debate on how much will be donated to charities, such as the Anti-Defamation League and the Philonise and Keeta Floyd Institute for Social Change.
