Adidas Posts First Loss in 31 Years Due to 'Yes'... Inventory Worth 1.7 Trillion Won

Adidas Reports 83.5 Billion KRW Loss Last Year... First in 31 Years
Impact of Parting Ways with Controversial Hip-Hop Star Yae

Global sports brand Adidas parted ways with hip-hop star Ye (Kanye West) and posted a loss for the first time in 31 years. On the 13th (local time), CNN in the United States reported, "The failure of Yeezy has continuously decreased sales, driving Adidas into a loss." According to Adidas' earnings announcement on the day, it was found to have incurred a loss of 58 million euros (approximately 83.5 billion KRW) last year. This is Adidas' first annual loss since 1992.

Hip-hop star Kanye West.

Adidas had collaborated with Ye's shoe and clothing brand 'Yeezy' since 2013. However, after Ye became highly controversial due to anti-Semitic and Nazi-sympathizing remarks and was ousted from the entertainment industry, Adidas terminated the contract in October 2022. Ultimately, what remained was the inventory of 'Yeezy.' Adidas struggled with handling inventory worth 1.2 billion euros (approximately 1.7 trillion KRW). The 'Yeezy' products, which were initially intended to be discarded, were sold twice last year for about 750 million euros (approximately 1.1 trillion KRW), and out of the sales revenue of 300 million euros (approximately 400 billion KRW), 140 million euros (approximately 200 billion KRW) were donated to charities.

However, compared to the annual sales of 1.2 billion euros recorded previously, this was a significant loss. The 16% decrease in North American sales, Adidas' second-largest market, from 2022 to last year also played a major role in the deficit. Adidas stated, "A decline in North American sales is expected again this year, and inventory remains high," but added, "Excluding Yeezy, other sectors are expected to achieve double-digit growth rates in the second half of this year."

Adidas and Yega collaborated on the Yeezy product.
[Image source=AP Yonhap News]

Bjorn Gulden, the CEO who moved from competitor Puma last year, is pinning hopes on major events such as the Paris Summer Olympics, the UEFA European Football Championship (Euro 2024), and the South American Football Championship (2024 Copa America) this year. CEO Gulden said, "Inventory is being maintained healthily in all regions except the United States," and added, "This year will be a year to showcase our brand through sports events."

Ye sparked controversy in 2022 due to mental health issues and an obsessive fixation on his ex-wife, model Kim Kardashian. Additionally, his social media accounts were blocked due to anti-Semitic and racist remarks, and he was expelled from events such as the Grammy Awards.