Adidas announced on Thursday its decision to sell off parts of its unsold Yeezy stock and donate the proceeds to charity. According to Fortune, the move comes after months of contemplating different options, including burning the merchandise.
Adidas predicted that losing the Yeezy products would cost the company $1.3 billion in sales this year, reducing operating profit by $534 million, with the company projected to break even this year. The decision to sell the stock and donate the proceeds to charity is a significant step for Adidas toward making a social impact while also addressing the financial loss caused by unsold stock.
Adidas CEO Bjorn Gulden announced during the company’s annual meeting that some of the profits from the sale would go to organizations that had been hurt by Kanye West’s controversial anti-Semitic comments. The decision followed four months of consideration and ruled out the destruction of the shoes. West’s association with Adidas ended after his anti-Semitic comments negatively impacted Adidas’ sales, which fell 1% against the expected 9% growth. However, Adidas could still have to pay West 15% commission on future sales of his products.
Adidas’ decision not to destroy the unsold Yeezy stock is a welcome one as it will help reduce waste while also benefitting charities. The move is also a positive one for Adidas as it demonstrates a willingness to take responsibility for their actions and make amends for any negative impact caused by their partnerships. Furthermore, it sets an example for other companies to follow, showing that there are alternative solutions to wasteful practices that benefit society as well as business interests.
West’s repeated attacks on the Jewish community, including an anti-Semitic tirade on Revolt TV’s “Drink Champs” talk show and a statement about “death con 3 on Jewish people,” caused Adidas to face public and employee pressure to cut ties with him.
Although Adidas started working with Ye in 2013, the company faced criticism for its inaction since October when it began a review of the partnership. The partnership between Adidas and West had a “tremendous impact” on the sportswear maker’s business. However, Adidas claims that it will have a short-term negative effect of up to $246m on net income in 2022 due to high seasonality in the fourth quarter.
The termination of this partnership has created a significant impact on both parties. While Adidas has lost a valuable collaborator, West has lost a substantial source of income and his billionaire status.