The cooperation between Adidas and Kanye West initially looked like a real coup. But then the scandal rapper plunged the sporting goods group into a real crisis with intolerable statements.
Adidas once celebrated the rapper Kanye West as a brilliant designer – and above all as a revenue generator that had hardly been seen in Herzogenaurach before. CEO Björn Gulden admitted that he got “big eyes” when he was still with rival Puma and saw what was going on with Adidas and the US musician.
Until the musician’s public statements became more and more extreme, his behavior towards employees more and more outrageous and the pressure on Adidas increased. Finally, in October 2022, there was a break: West had to go, but the problems he had caused, including a huge pile of lifestyle products he had designed, remained.
Products continue to be sold
What to do with the things that achieved dream prices in stores, especially in the US? Resell? The storm of indignation would have been foreseeable. Give away? That would have promoted an immense secondary and black market. Even the burning of the articles, which are highly valued by fans, was considered – with a negative contribution to earnings of 700 million euros as a result and a need for explanation in terms of sustainability. After highly complex discussions with shareholders, the solution that had been announced for days finally came yesterday: the products will continue to be sold – at least a part of them. The money will be donated. The collector scene is already in the starting blocks.
“After careful consideration, we have decided to start selling a portion of the remaining Adidas ‘Yeezy’ products,” said Gulden. Selling and then donating was the preferred option for all organizations and stakeholders. “We believe this is the best solution because it values the designs created and shoes produced, works for our employees, solves an inventory problem and will have a positive impact on our communities,” said Gulden. “Hate of any kind has no place in sport and society and we continue to fight against it.”
Loss of 24 million euros
Adidas got immediate applause for Solomon’s solution to a difficult problem. “At a time when anti-Semitism has reached historic levels in the United States and is rising worldwide, we appreciate how Adidas has turned a negative situation into a very positive outcome,” said Anti-Defamation League CEO Jonathan A .Greenblatt. “The company has shown real prudence by partnering with community organizations dedicated to combating this vicious and persistent hatred.” The US organization, which works against discrimination and defamation of Jews, is one of the recipients of the Adidas donations.
Nevertheless, star designer Kanye West, who has become a problem, has left behind considerable damage to Adidas. In the first quarter of 2023 there will be a loss of 24 million euros, and there will be hardly any profit in 2023 as a whole. West has a significant stake in it. The shareholders protested at the general meeting because a good part of their share value was lost, at least temporarily. Some of them refused to discharge the Board of Management and the Supervisory Board. A class action lawsuit is pending in the United States. Tenor: Adidas should have recognized earlier who the company was working with. And finally, the departure of CEO Kasper Rorsted was overshadowed by the West problem.
Source: Stern
