Adidas reportedly plans to sell existing Yeezy product designs using its own branding after cutting ties with rapper and designer Kanye West.
According to analysts at Morgan Stanley and RBC Capital Markets Adidas will start selling the products solely under the companies brand at the top of the new year.
“Looking ahead, on our understanding, the company will not sell any Yeezy-branded products and all Yeezy products will be branded under the Adidas brand,” Morgan Stanley analyst Edouard Aubin said in a statement to clients Tuesday.
“Adidas has the rights to existing Yeezy product designs and can sell these using Adidas branding (not Yeezy branding) following the termination of the Yeezy partnership, which Adidas intends to do” in the first quarter of next year, RBC analyst Piral Dadhania said in a note. “Speaking to the company, it believes it can limit the loss of revenues through this strategy, and will also save on expenses related to royalty and marketing fees no longer payable in 2023.”
As we previously reported the company released a statement Tuesday cutting ties with the rapper after his anti-Semitic comments on the Jewish community. “Adidas is the sole owner of all design rights to existing products as well as previous and new colorways under the partnership,” the company said.
“We would expect to see further revenue, margin and earnings consensus downgrades following this latest installment of bad news at Adidas,” RBC’s Dadhania said. “We are doubtful whether Adidas will be able to fully compensate for loss of Yeezy profits in 2023 which is likely to weigh on sentiment further in our view.”