Picture this situation. $1.3 billion in clean, desirable, unused inventory sitting in your warehouses. Your predecessor recently got fired for bad business judgment after several successful years. Your brand is in the sewer and still sinking.
There are plenty of buyers who would love the inventory because they could almost instantly sell it for a big profit, but if you sell it to them you might have a dozen lawsuits and get the ax too.
The inventory we are discussing is Adidas’s leftover Kanye West brand Yeezy shoes. Tomorrow at Adidas’s annual stockholder meeting in Germany, one of the company’s largest stockholders will make a speech demanding answers about how the company got into this predicament.
Adidas began a formal relationship with the rapper Kanye West, now officially known as Ye, in 2013. West had an earlier shoe design deal with Nike in 2009. In 2015, Adidas Yeezy Boosts were introduced, with a long-term deal confirmed in 2016.
West had built a career in fashion design and had a highly successful musical career, but in recent years his behavior and remarks became more and more erratic. According to some accounts, people who worked with him became fearful of his violent outbursts. He is reputed to have thrown objects at folks in closed creative sessions.
He announced a presidential campaign in 2020 with a bizarre unscripted rant about abortion. He supposedly said his shoes were inspired by “skinheads and Nazis.” After 2020, Anti-Semitism became one of his trademarks. Yet Adidas kept pursuing him, and his shoes sold particularly well in North America. Forbes magazine estimated that with his Adidas deal his net worth was $2 billion .
He also endorsed Kyrie Irving, a talented NBA basketball player, notorious for his true gift for team disruption. West’s marriage with Kim Kardashian ended in divorce in 2022.
But nothing seemed to kill the Yeezy brand. Adidas stuck with West because Nike had a grip on the growing basketball shoe market with Michael Jordan and LeBron James, while Adidas had little traction other than West’s shoe.
By 2022, West had become more and more vocal in his anti-Jewish remarks with Kyrie Irving following his lead. They seemingly were trying to top each other with their nastiness. Adidas either couldn’t stop him or wouldn’t, and it finally started to affect their sales. Big retailers slowly began to abandon the brand. Sales sank slowly at first, then rapidly. Finally, after a particularly nasty outburst on Twitter, Adidas ended their deal in October of 2022. The head of Adidas was canned, as was the number one company executive in North America.
Now Adidas has a new boss, Bjørn Gulden. The company “launched an investigation” in November about what happened. It has recently been sued, and one of the largest stockholders is demanding to find out why Ye was kept for so long and why $1.3 billion in gym shoes are gathering dust even though many folks want to buy them.
Personally, I am disgusted by West and Adidas’ behavior. Key people had to know West was nutty at best. Yet they sat on their hands while the money poured in.
Now Adidas has a mess. If they sell the shoes to the highest bidders they will become valued items for resale on eBay and the street.
They can give them to poor people in Africa and watch them again rebound to the streets of LA and Chicago.
They can destroy them, absorb the loss, and be criticized for forgetting the poor refugees.
Bjørn Gulden says they will be “repurposed.” It is a “nice” word from a “nice” company.
If you were Adidas, how would you dispose of your verboten Kanye West shoes?
When do you fire an “irreplaceable” employee?