adidas AG (OTCQX:ADDYY) is making progress in reducing the burden left by Kanye West’s Yeezy stock after the fashion brand cut ties with the rapper late last year.
After making anti-Semitic remarks the German retailer said it had been left with €1.2bln of unsold Yeezy clothing and shoes.
“We see Adidas’ closing inventory position to reduce to €5.3bln by the end of the quarter, assuming €80mln of Yeezy was released in June,” analysts at Jefferies Group (NYSE:JEF) said.
Last September the retailer’s inventory reached a peak of €6.3bln.
In the second quarter, organic sales are expected to drop by 8.8% year-on-year, excluding the €200mln of revenue generated from the Yeezy clearance, the US bank added.
Underlying losses for the quarter are forecast to fall to €88mln, Jefferies confirmed adding that the figure doesn’t include the €50mln on Yeezy’s contribution “post donations”.
In a plan to rid themselves of the scandal-ridden stock, Adidas said it will sell the items and donate the profit to charities affected by the rapper’s comments.
Jefferies places a ‘hold’ rating on the stock and targets a €175 share price target.
Adidas shares dropped 3.7% on Thursday to €167.