Adidas' Yeezy Phenomenon

Adidas, the sports apparel giant, reported impressive revenue of $437 million (€400 million) from the sale of Yeezy merchandise during the second quarter of 2023, according to the company's latest earnings report. Despite parting ways with rapper Kanye West last year due to his series of antisemitic outbursts, the Yeezy brand continues to thrive, showcasing sustained interest among consumers.

Revenue Boost from "Initial Product Drop"

Adidas attributed its second-quarter revenue surge to an "initial product drop" of the remaining Yeezy inventory.

Consistent Sales Performance

The $437 million in sales closely aligns with Yeezy's performance during the same quarter the previous year, indicating that Kanye West's controversies had little impact on the brand's popularity.

Growth in Direct-to-Consumer Revenue

All Yeezy sales were conducted exclusively through the company's website and app, leading to a notable 16% year-over-year increase in "direct-to-consumer" revenue.

Cost Incurred from Yeezy Business Discontinuation

In the first half of 2023, the company incurred a cost of around $437 million (€400 million) as a result of discontinuing its regular Yeezy business.

Potential Write-Off

A potential write-off of the remaining Yeezy inventory is estimated to cost the company around $437 million (€400 million), which is lower than the initial estimate of $546 million (€500 million) reported in the first-quarter earnings.

Total Operating Loss Projection for 2023

Adidas projects a total operating loss of $491.5 million for 2023 if adverse scenarios, including the Yeezy inventory write-off, materialize. This projection also includes an additional $218 million loss related to a "strategic review" of the company. Notably, this estimate has reduced significantly from the $771 million forecasted in Q1.

Adidas's Charitable Initiative: Fighting Discrimination and Hate

In May, Adidas unveiled an exciting initiative to make the remaining Yeezy products in their inventory available for purchase. Notably, a substantial portion of the proceeds generated from these sales will be generously donated to carefully chosen organizations dedicated to combating discrimination and hate, encompassing critical issues like racism and antisemitism.