Adidas AG’s Yeezy (aka publicly exiled US rapper Kanye West) troubles led to a 3% year-on-year decline in e-commerce revenue for the third quarter.
While the sale of the remaining Yeezy inventory generated approximately €200 million in revenue, this was notably lower than the €350 million reported in the third quarter of last year.
Adidas launched its Yeezy footwear range in 2015 when Kanye was at the height of his popularity.
After West’s public fall from grace in 2022, when he unleashed a tirade of antisemitic insults and conspiracies, Adidas was forced to immediately cut ties with the rapper.
An inventory overhang has dogged Adidas ever since, which has distorted the German sportswear brand’s finances to the downside.
Excluding Yeezy, Adidas’ e-commerce sales grew by over 25% in the third quarter.
Adidas posted a 7% increase in direct-to-customer revenues; excluding Yeezy, the company’s DTC business grew 17%.
In North America, a 7% decrease in sales “was solely related to the significantly smaller Yeezy business”, said the group. “Excluding Yeezy, revenues in North America increased versus the prior year.”
Operating profit reached €598 million, compared to €409 million in the same period last year, with the contribution from Yeezy sales dropping to around €50 million, down from €150 million in the third quarter of 2023.
Key shareholder cuts stake
Adidas shareholder Groupe Bruxelles Lambert has further reduced its stake to 3.51%, according to a Reuters report.
GBL had previously cut its stake to 5.1% from 7.6% earlier in the year.
“We sold some shares but reiterate our support to the company, its management and its strategy," Reuters quoted GBL as saying.
Despite the Yeezy debacle, Adidas has performed well on the stock market thanks to a strong performance across the rest of the brand.