Adidas broke with Kanye West and his Yeezy brand on Oct. 25 and is now expecting to take a hit of about $500 million in revenue and $250 million in net sales for the current year. In its slide presentation for Q3, however, the company points out that its Yeezy business is “overstated” in two ways: first, in revenue, because the brand is “geared toward Q4” and therefore highly seasonal, and second, in profitability because Yeezy’s profit and loss include only “directly related costs.”
As we have just reported, Adidas’ net income for the third quarter amounted to $352 million, down more than 64 percent year-on-year. The company has reduced its guidance for the third time since July 26 – in the face not just of the Yeezy problem but also of falling sales in Greater China, about $500 million in excess inventory, the cessation of its business in Russia over the war in Ukraine, and so forth.
The slide presentation declares Adidas to be “the sole owner of all design rights related to existing [Yeezy] product as well as both previous and new colorways.” In a call with analysts, according to several press outlets, CFO Harm Ohlmeyer said that Adidas would begin selling the designs stripped of the Yeezy name next year.
Comments from Kanye West himself on this turn of events are hard to come by, but it appears that he is not done provoking the Western sentiment. While Adidas makes plain its support for Ukraine, the Yeezy website now displays a heart-shaped Russian flag and a drawing of the iconic St. Basil’s Cathedral, situated in Moscow’s Red Square.
