Adidas has a messy, overflowing closet these days.
After severing ties with the controversial rapper Ye (better known as Kanye West), the world’s second-biggest sports apparel brand has ~$750m worth of Yeezy-branded inventory it may never sell, setting up a rough year for the company.
Adidas anticipates a percentage drop in sales in the high single digits compared to last year — a total that could reach ~$2B, according to Business Insider.
His Yeezys, which retail for $200+, were among the hottest shoes in the world, earning Adidas $1B+ annually in recent years.
But he’s not Adidas’ only problem. Its strategy over the last few years has centered on partnerships with other artists — like Bad Bunny, Pharell Williams, and Beyoncé — that haven’t always met financial expectations.
Bey’s Ivy Park clothing brand (a collaboration with Adidas) has struggled in recent times, per The Wall Street Journal:
As one analyst explained, Adidas has struggled to find it, and newer rivals like Hoka One One and On may capitalize.
BTW: Adidas hired CEO Bjørn Gulden away from Puma last year, continuing a bitter rivalry that dates back to the founding of the companies by the Dassler brothers.