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Why Adidas Could Lose Over $1 Billion in Sales After Cutting Ties With Ye
Adidas confessed to struggling with sales after it had to suddenly cut ties with the American rapper formerly known as Kanye West, Ye. The owner of the Yeezy fashion brand made antisemitic and dangerous remarks on public platforms, forcing the German company to close their deal.
This is a story that’s been circulating for a while now, but let’s take a fresh business look at it. How and why Adidas could lose over $1 billion because of this.
Adidas owns most of the already-produced Yeezy clothing
Adidas has loads of Yeezy inventory that could generate over $500 million in profits. However, selling the Yeezy brand is not as easy as before since they’ve cut ties with the rapper. Though they own and have rights to the stock they have, it has the Yeezy brand, which represents Ye, who made hateful, dangerous, and unacceptable remarks in public.
This means the brand is stained and may have lost many customers. Even if Adidas sells Yeezy sneakers and other brands in their shops, no one will want to buy them.
Problems repurposing Yeezy products
Adidas plans on repurposing the Yeezy branded products it currently has to recover some of the profits and patch up the balances at the end of its financial year. However, this isn’t as easy as finding a forex broker to help accumulate your assets.
Some customers will want to keep their distance from anything Yeezy-like. Repurposing the brand can cost them in terms of labor. Also, repurposing means removing the Yeezy name from the sneakers and other clothing items Adidas still stocks of the brand. The design, fabric, and everything else stay.
On top of that, for customers obsessed with brands, it’ll feel like buying a duplicate and cheaper version of Yeezys. That’s something many frown upon.
Ye had been in partnership with Adidas for nine years
Ye and Adidas had been in partnership for nine years already, meaning the rapper’s brand was doing very well. The cutting ties part of it was a sudden move that the business side couldn’t handle.
In business, you have to plan ahead for things because making quick decisions can hurt an organization. This is not to say Adidas made a wrong decision in cutting ties with Kanye West. People would have probably been angry at the company for not doing anything.
An unplanned closing
Cutting a business deal without a plan in place is not something any company wants to find itself in. However, sometimes certain situations force you to take such actions. This is something we took out from the Adidas Ye story that’s been circulating.
Handling business matters in the public space is also tricky because, most times, you’ll face public scrutiny, which can affect your sales – whether you make the right decision or not.
Let’s hope that the German company will recover from its loss and that Ye has learned a lesson from spreading hate speech.
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