According to Adidas‘ latest earnings report, the sale of Yeezy merchandise in the second quarter of 2023 brought in approximately $437 million (€400 million) in revenue. This comes as part of the sports apparel company’s efforts to sell off the remaining stock of the brand associated with rapper Kanye West, with whom they ended their partnership last year due to a series of antisemitic outbursts.
The company attributed its second-quarter revenue boost to the introduction of a fresh batch of its remaining Yeezy inventory. The sales of approximately $437 million were comparable to Yeezy’s performance in the same quarter of the previous year, indicating that the controversies surrounding Kanye had not significantly affected the brand’s popularity.
Throughout this quarter, all Yeezy sales were exclusively conducted through the company’s website and app, leading to a 16% year-over-year growth in the company’s “direct-to-consumer” revenue.
Nevertheless, the company acknowledged that the termination of its regular Yeezy business resulted in a loss of approximately €400 million in the first half of 2023.
Furthermore, there is a possibility that the company may have to write off its remaining Yeezy inventory, incurring an additional cost of approximately €400 million. This figure is slightly lower than the initial estimate of €500 million mentioned in the first-quarter earnings report.
The company is anticipating a total operating loss of $491.5 million for the year 2023, considering all unfavorable scenarios, which includes the possibility of writing off the remaining Yeezy inventory. In addition to the potential Yeezy write-off, the company foresees an extra loss of $218 million due to a “strategic review” of the company. These projections represent a substantial decrease from the Q1 estimates, which had initially forecasted losses of $771 million.
In May, the company revealed its strategy to sell a portion of its remaining Yeezy inventory. They announced that a substantial portion of the proceeds from these sales would be contributed to selected organizations dedicated to fighting against discrimination and hate, encompassing issues such as racism and antisemitism.
Adidas’ Q2 2023 Yeezy sales reached $437M despite Kanye controversies. Termination of the Yeezy business led to €400M loss in H1 2023. Potential write-off of remaining inventory may cost €400M, below the initial €500M estimate. Anticipates a total operating loss of $491.5M for 2023, with an extra $218M loss from a strategic review. Sales contributions support anti-discrimination causes.