According to the Associated Press, Adidas revealed plans on Wednesday to allocate more than $150 million to organizations dedicated to combating anti-hate groups and other hate forms. This philanthropic effort stems from the revenue generated from last year’s sales of Yeezy sneakers, following the termination of its partnership with the rapper Ye, previously known as Kanye West.
The decision comes in the wake of the sportswear giant severing ties with Ye in October 2022 due to his public dissemination of offensive remarks and other offensive content. Post-separation, Adidas found itself with an excess inventory of the once highly sought-after Yeezy line, amounting to 1.2 billion euros ($1.3 billion) in unsold sneakers.
Opting for a constructive approach, Adidas undertook the sale of the remaining inventory in phased releases, the proceeds of which are partially directed to anti-hate organizations. Notable beneficiaries include the Anti-Defamation League and the Philonise & Keeta Floyd Institute for Social Change, spearheaded by Philonise Floyd, a prominent figure in social justice circles and brother to the late George Floyd.
Despite the Yeezy brand’s dwindling sales, from over 1.2 billion euros in 2022 to approximately 750 million euros last year, Adidas managed to generate a profit of 300 million euros from the line in 2023. Out of this, over 140 million euros ($152 million) have been earmarked for donation.
Adidas attributes its operational recovery and the decision to liquidate a significant portion of the Yeezy stock as key factors in achieving an operating profit of 268 million euros last year, despite a nearly 60% reduction from the preceding year. The company reported a net loss of 58 million euros for the year, a stark contrast to the 254 million euros net income in 2022, primarily due to a higher tax rate.
Looking ahead, Adidas anticipates generating around 250 million euros from the sale of the remaining Yeezy sneakers this year. However, the brand anticipates challenges in the North American market, forecasting a mid-single-digit revenue decline, largely attributed to the adverse effects of the Yeezy fallout. Nevertheless, the company remains optimistic about its global performance, projecting a significant increase in operating profit to about 500 million euros, buoyed by popular lines such as Samba and the introduction of new products, alongside the anticipated boost from major sporting events like the upcoming Paris Olympics.
According to Adidas, this strategic pivot not only addresses the immediate financial implications of the severed partnership with Ye but also signifies a broader commitment to social responsibility and the fight against hate in all its forms.
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