The Numbers: Yeezy’s impact on Adidas’s bottom line.
The Yeezy sales added €150 million to Adidas’s operating profit for the first half the year, “an incremental amount,” the sportswear maker said.
That’s partly because the revenue amounted to roughly half of the €800 million that Adidas took in from the Yeezy gear in the first half of 2022. And Adidas reported a steeply lower operating profit for the half-year: €236 million, versus €828 million a year earlier. Adidas blamed the 70 percent drop on one-time expenses for a strategic review, “as well as the donations and accruals for further donations.”
The company declined to forecast how much more money the ongoing effort to shed the Yeezy gear could generate.
Adidas began selling its first batch of its remaining Yeezy shoe models in June. They sold out within several weeks, the company said.
The sale was a step toward resolving a $1.3 billion inventory headache that had plagued the company since it dropped its collaboration with Ye. And the revenue total was a sign that the shoe line, which had previously been hugely profitable for Adidas, remained popular despite the furor over the rapper’s remarks.
“The sale of the first part of the Yeezy inventory did of course help both our top and bottom line in the quarter,” Bjorn Gulden, the company’s chief executive, said in a statement.
Although Adidas no longer has a contract with Ye, the company said it was honoring all remaining legal obligations. But Mr. Gulden refused to elaborate on how much the rapper was making from the sales. Ye and Adidas are continuing legal discussions, Mr. Gulden said.
How the Sale Works: More models coming in August.
A second batch of Yeezy sneakers and slides hit the market this week, and sales of the remaining inventory will continue to be released this year, as the company pushes “to get rid of it,” Mr. Gulden said.
He refused to speculate on how much would be generated by the next batch, which includes some of the most popular designs, such as the Yeezy Boost 350 V2, 500 and 700, as well as the Yeezy Slide and Foam Runner.
Some of the most popular styles — and most valuable among collectors — were sold off in the first release, which amounted to roughly a quarter of all pairs that had been stuck in warehouses, he said. Remaining models might not bring in as much, given their lesser value.
What Happens Next: More donations to come.
Adidas said it has set aside €110 million of its proceeds from the first sale of the Yeezy inventory to donate to organizations. The donation is not a percentage of the sales, but an amount that the company said reflected “the value that we think we should donate after the conversations we have had,” Mr. Gulden said.
Among the groups receiving donations so far have been the Anti-Defamation League, the European Jewish Association and the Philonise & Keeta Floyd Institute for Social Change, which is run by Philonise Floyd, the brother of George Floyd.
The sportswear company has also been speaking with Robert K. Kraft, the billionaire owner of the New England Patriots, who has created a foundation to fight antisemitic rhetoric. Square blue pins, which the foundation uses as a logo, will be attached to all Yeezys that Adidas sells directly in North America.