After abruptly breaking off its relationship with rapper Kanye West in October, German sportswear giant Adidas will now have to deal with a current inventory of $530 million worth of unsold Yeezy sneakers.
According to data obtained by the Financial Times, Adidas will try to sell the items under its own brand to minimize possible losses, although it is unknown if the company’s strategy includes lowering prices for the final consumer.
Yeezy, which offered limited-edition, high-end apparel and sneakers, accounted for about 7% of Adidas’ sales this year worth $1.8 billion. The price of the most popular sneakers ranged from US$300 to US$1,500.
The first shoe model (Boost 750) launched in February 2015. Five years later, Forbes magazine described Yeezy’s rise as “one of the biggest milestones in retail history this century.”
The Adidas-Yeezy partnership came to an abrupt halt in October after the rapper made anti-Semitic comments on Twitter. Adidas said it would suffer a $247 million negative hit to its earnings as a result.
Second-hand prices skyrocket
Later that month, when the German brand ended its $1.5 billion partnership with the 45-year-old rapper, it didn’t take long for the resale value of the Yeezy sneakers to skyrocket. Customers rushed to get rid of the items, thinking they would be more difficult to acquire.
RealReal, which sells a selection of Yeezy x Adidas sneakers, was one of the resellers raising its prices at the time, but later confirmed that it will “no longer accept any further orders” from the brand.
Items for sale included a pair of Yeezy x Adidas Boost Wave Runner sneakers for $395, a markup of nearly $240 off the original retail price of $159.75.
The resale site also listed the Yeezy x Adidas Boost 350 Moonrock sneakers for $325, when they could be purchased for just $140 on a vendor’s site.
Some companies, such as Balenciaga, Gap and Footlocker, joined Adidas and cut ties with Kanye West, removing Yeezy products from their stores.
In November, Adidas announced it was investigating West, after a Rolling Stone magazine article exposed one of the worst corporate and celebrity scandals of the year.
The magazine was able to interview more than a dozen former Yeezy employees and they confirmed that the rapper was acting erratically and inappropriately in the workplace. West was accused of showing workers sexually explicit material, including some featuring his ex-wife Kim Kardashian.
A former Yeezy employee saw “Ye” tell a young woman of color to sit on the floor during an hour-long meeting because she “didn’t deserve to sit at the table.”