Omar Saad, an analyst with Evercore International Strategy & Investment, estimates that the Yeezy line generates between $1 billion and $2 billion in annual sales for Adidas. According to Bloomberg, the Swiss investment bank UBS estimated the value of Yeezy at between $3.2 billion and $4.7 billion in 2021.
When it made the announcement on Tuesday, Adidas put a price on the decision to end its partnership with Ye, the rapper formerly known as Kanye West - up to $246 million in profits this year.
Adidas and Ye's footwear and apparel collaboration, Yeezy, which debuted in 2015, will end immediately due to the rapper's hateful words and deeds, Adidas announced in a statement on Tuesday. The statement further stated that the company would stop producing all Adidas Yeezy products and would stop paying Ye.
Due in part to Adidas's potential decision to remove Yeezy products from shelves in physical stores and online, which would result in lost revenue from potential sales, the costs could reach hundreds of millions of dollars.
What is Adidas Yeezy?
Adidas and American rapper, designer, and entrepreneur Kanye West teamed up to create the Yeezy clothing line. Along with Yeezy Boost sneakers, high-end limited edition colorways, shirts, jackets, track trousers, socks, slides, lingerie, and slippers, it also sold women's shoes.
In February 2015, the "Boost 750" shoe model made its debut. According to Forbes in 2020, one of the greatest retail stories of the century was the ascent of Yeezy. Yeezy had a huge impact on and inspired a lot of other fashion companies.
What happened between Adidas and Kanye West?
Kanye West, A.K.A Ye, caused controversy earlier this month when he showed up at a surprise concert in Paris wearing a T-shirt with the slogan "White Lives Matter," which has been condemned as hate speech by the Anti-Defamation League and promoted by white supremacist organizations.
In a press release, the company stated that it "does not tolerate antisemitism or any other type of hate speech." Ye has recently made remarks and taken actions that are unacceptable, dangerous, and against the company's values of inclusion, respect, and fairness. According to a statement released on Tuesday, the clothing retailer Gap, which maintained a partnership with Yeezy, ended that arrangement in September. The company also announced that it is taking immediate action to remove Yeezy Gap products from its stores.
Adidas reduced the harm to its reputation by severing ties with Ye, the industry consultant Antoshak claimed, despite the financial hit brought on by a potential loss of merchandise.
From a business standpoint, he claimed that the longer the relationship lasted, the more money the company would lose.
What are the financial scores of Adidas and Kanye West?
After reducing its projected 2022 profit margin from 7% to 4% on Thursday due to a surplus of inventory and a decline in China sales for its apparel and footwear as a whole, the company now estimates that it will lose up to $247 million in lost sales from Kanye West's Yeezy line alone in 2022. This is yet another harsh revision.
With $247 million in sales lost this year as reported by the company and a forecasted $400 million in lost revenue in 2023, Adidas has lost a total of $645 million as a result of its breakup with West. 27.5 times as much- that is the difference between West's annual earnings from the Yeezy deal and Kasper Rorsted, the CEO of Adidas. Our estimates place West's earnings from the Adidas partnership at $220 million annually, while Rorsted earned about $8 million in 2017.
FAQs
Q. What is the net worth of Kanye West?
A. After Adidas severed connections with Kanye West for his antisemitic statements on social media, he has dropped off Forbes' list of the world's richest billionaires. West's net worth is currently estimated by Forbes to be around $400 million (£346 million), down from $2 billion (£1.7 billion).
Q. How did Kim Kardashian react to her ex-husband’s controversy?
A. On Monday, Kim Kardashian tweeted in an oblique manner to her ex-husband, "Hate speech is never OK or excused. I stand in solidarity with the Jewish community and demand an end to the terrible acts of violence and hateful remarks directed at them.”
Q. What was the total royalty payment and marketing fees?
A. Throughout the first four years of the Adidas contract, or through 2020, the Yeezy business made more than $500 million in total royalty payments and marketing fees. According to Forbes in 2019, Ye had a deal with Adidas that gave him a 15% royalty on all Yeezy wholesale sales; however, Ye told Bloomberg News in September that he wanted to renegotiate the terms of the deal to give him a 20% lifetime discount.
