Adidas agrees to sell remaining Yeezys

Adidas agrees to sell remaining stock of Yeezys in 2024

In 2024, adidas anticipates a mid-single-digit growth in currency-neutral sales. This projection incorporates the sale of remaining Yeezy inventory at cost, estimating sales around €250 million. Excluding Yeezy revenues, the underlying adidas business is forecasted to experience high-single-digit growth in currency-neutral terms.
 

Profitability outlook for Adidas 

The planned sale of remaining Yeezy inventory at cost is not expected to impact the company's operating profit for the year. However, unfavorable currency effects are anticipated to significantly affect profitability in 2024, affecting reported revenues and gross margin development. Taking these factors into consideration, adidas projects an operating profit of approximately €500 million in 2024.
 

Financial performance and strategic direction for the Three Stripes brand

Adidas has released preliminary financial numbers for the fourth quarter, indicating better-than-expected results. Despite flat currency-neutral revenues for the full year, the company achieved an operating profit of €268 million, surpassing initial guidance by €368 million.

Improvements in operating business and the decision not to write off €268 million of Yeezy inventory contributed to this performance. Consumer research suggests the remaining inventory can be sold in 2024 at least at cost price, leading to selective write-offs for damaged or severely compromised inventory.

Adidas highlights strides in consumer engagement, product quality, team investments, visibility, and inventory management. Acknowledging current financial challenges, the company reaffirms its commitment to rebuilding a strong foundation, leveraging its historical strengths.
 

Adidas' outlook for 2024

Anticipating sales to start flat but improve gradually throughout the year, adidas expects high-single-digit growth in the underlying business for the full year. Second-half growth is projected to exceed 10%.

Despite challenges such as unfavorable currency effects, ongoing North American market dynamics, and global uncertainties, adidas aims for an operating profit of around €500 million in 2024. This year marks a pivotal step towards reestablishing double-digit growth and a 10% operating margin for the company.
 

Final thoughts about Adidas' future with Yeezy

The ongoing saga between Ye and Adidas has been unfolding since October 2022, marked by a series of decisions and reversals. Initially declaring they would cease selling Yeezys, Adidas swiftly reversed course, hosting an unofficial Yeezy day in 2023. However, following controversial remarks from Ye, Adidas paused Yeezy sales in response to concerns of social appropriation, only to resume sales later to fund anti-Semitic initiatives. Yet, amid escalating tensions in the Gaza Strip and Israel, Adidas once again suspended Yeezy sales. Now, in 2024, Adidas has resumed selling its remaining Yeezys, potentially marking the final chapter of this back-and-forth narrative.

Critics argue that Adidas' wavering stance portrays them as indecisive and lacking in conviction. Despite the controversies, some question whether these actions truly position Adidas favorably. Contrasting with Nike's handling of controversies involving figures like Ja Morant and Tom Sachs, where sales continued unabated, Adidas' repeated reversals raise questions about consistency and commitment.

Ultimately, it appears inevitable that Adidas would need to address its remaining Yeezy inventory. However, the repeated shifts in approach have left some observers questioning the brand's resolve. As 2024 unfolds, the question remains: Will consumers still be drawn to the remaining Yeezys, or has Adidas' handling of the situation impacted their appeal?