Adidas plans to keep selling its Yeezy product designs—just without the Kanye West branding – Fortune


Adidas AG intends to sell existing Yeezy product designs using its own branding after ending its partnership with rapper and designer Ye, formerly Kanye West. 
Adidas management has indicated that it will start selling the products under the company’s brand at the beginning of next year, according to analysts at Morgan Stanley and RBC Capital Markets. That follows the dissolution of the lucrative tie-up, which Adidas has described as one of the industry’s most successful ever, after Ye made antisemitic comments. 
“Looking ahead, on our understanding, the company will not sell any Yeezy-branded products and all Yeezy products will be branded under Adidas brand,” Morgan Stanley analyst Edouard Aubin said in a note to clients Tuesday. 
The company has already been under pressure from investors over weaker demand in China and production delays.  In speaking to analysts, Adidas focused on the potential upside of dissolving its partnership — fewer expenses.
“Adidas has the rights to existing Yeezy product designs and can sell these using Adidas branding (not Yeezy branding) following the termination of the Yeezy partnership, which Adidas intends to do” in the first quarter of next year, RBC analyst Piral Dadhania said in a note. “Speaking to the company, it believes it can limit the loss of revenues through this strategy, and will also save on expenses related to royalty and marketing fees no longer payable in 2023.”
A spokesperson for Adidas didn’t immediately respond to a request for comment.
In a statement Tuesday, Adidas condemned antisemitism and racism and said it would immediately end its relationship with Ye. The company said it would cease production of Yeezy-branded products and halt all payments to Ye and his businesses, but added that it’s the owner of the Yeezy design rights.
“Adidas is the sole owner of all design rights to existing products as well as previous and new colorways under the partnership,” the company said.
Adidas expects to absorb a €250 million ($247 million) hit to earnings this year due to the Ye breakup. Yeezy’s agreement with Adidas was set to run through 2026. Adidas shares fell 3.2% at the close of German trading. 
“We would expect to see further revenue, margin and earnings consensus downgrades following this latest installment of bad news at Adidas,” RBC’s Dadhania said. “We are doubtful whether Adidas will be able to fully compensate for loss of Yeezy profits in 2023 which is likely to weigh on sentiment further in our view.”
Gap Inc., which cut ties with Ye last month and began to wind down its Yeezy Gap apparel line, said Tuesday that it would pull all remaining merchandise and shut down its dedicated website.
Sign up for the Fortune Features email list so you don’t miss our biggest features, exclusive interviews, and investigations.
© 2022 Fortune Media IP Limited. All Rights Reserved. Use of this site constitutes acceptance of our Terms of Use and Privacy Policy | CA Notice at Collection and Privacy Notice | Do Not Sell My Personal Information | Ad Choices 
FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. FORTUNE may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.
S&P Index data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Terms & Conditions. Powered and implemented by Interactive Data Managed Solutions.



Related posts

What's in a Name? The Importance of Chinese Language Branding - The Fashion Law

Chinese consumers have a well-established affinity for luxury goods. The robustness of luxury goods…
Read more

Burger King has a new branding strategy, and it’s a Whopper - Central Penn Business Journal

SubscribeForgot your password? By: David Taylor…
Read more

A Beginner's Guide to Personal Branding in 2022 - The Motley Fool

If you’re on a Galaxy Fold, consider unfolding your phone or viewing it in full screen to best…
Read more

Sign up for The Pro People Community's Daily Digest and get the best of Industry updates, tailored for you.

Leave a Reply

Your email address will not be published. Required fields are marked *