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Friday, June 14, 2024

Yeezy Buyers Bail Out Adidas By Snapping Up Leftover Inventory

  • Initial sales of remaining stock beat most optimistic of projections
  • Company issues improved fiscal forecast
Adidas Yeezy shoes on a shelf.
Shutterstock

Sports footwear and apparel giant Adidas has received some welcome economic news after cutting ties last year with Ye, formerly known with Kanye West, due to his antisemitic comments.

The company has reportedly received more than $565 million worth of orders for its outstanding Yeezy shoe inventory during an initial online sale — greater than its most optimistic forecasts — which could help avoid a costly write-down on its remaining stock.

Adidas said in May it would sell its unsold Yeezy merchandise and donate a “significant amount” of the proceeds to charities fighting racism and antisemitism. By early June, initial orders amounted to more than 4 million pairs of shoes.

The robust sales allowed Adidas to tell investors on Monday that the potential writeoff of remaining Yeezy inventory is now about $443 million, down from an estimated $554 million.

“Potential future Yeezy drops would further improve the company’s results,” Adidas said.

The Yeezy sales news was part of Monday’s reported preliminary second-quarter results. Adidas posted revenue of $5.92 billion, flat in currency-neutral terms, and an operating profit of $195 million, down 55% from the same period a year ago.

The company said both top- and bottom-line results were “positively impacted” by the initial Yeezy sales, with the projected quarterly loss now at $499 million instead of the prior $775 million. Adidas has also raised its full-year revenue guidance for 2023.

Adidas will release full quarterly results Aug. 3 — and will hope to follow a first quarter that beat analyst expectations.

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