Adidas Expects To Suffer $1 Billion Loss Due To Ye's Unsold Yeezy Items

Adidas revealed the potential losses it could face after severing its ties with Kanye West in November.

West has been facing financial troubles in the past months. Apart from losing his billionaire status after Adidas ended its partnership with him, he continuously faced issues involving the reported unpaid taxes of his brand, Yeezy Apparel, to the state of California.

He is also yet to deal with his former lawyers and representatives who quit working for him.

The "Jesus Is King" rapper, on the other hand, is not the only one suffering after the partnership came to an end.

Adidas' chief executive Bjørn Gulden said in a statement on the company's website that it could lose up to $1.3 billion in sales in 2023 due to the yet-to-be-sold Yeezy shoes and clothes in its inventory.

Despite the impending operating loss, Gulden urged everyone to come together to "put the pieces back together again" and make Adidas shine again. Still, he clarified that he and his team need some time to resolve everything.

"Together we will work on creating brand heat, improve our product engine, better serve our distribution and ensuring that adidas is a great and fun place to work. adidas has all the ingredients to be successful: A great brand, great people, fantastic partners, and a global infrastructure second to none," the statement continued.

The company said it would attempt to sell the shoes and clothes and stripped of the Yeezy name and branding. By doing so, Adidas expects it would save the company about $300 million in fees, including marketing expenses and royalty payments.

Adidas Could Still Face Troubles With Its Current Plans, Says an Analyst

Following the release of the statement, an analyst previously explained to CNN how repurposing West clothing would still bring problems to the brand.

Retail expert and managing director at retail consultancy Strategic Resource Group, Burt Flickinger, said that Yeezy remains "hopeless," so the other options only include destroying the items or donating unsold Yeezy items.

"There really are no good options for this distressed brand that sat somewhere between prestige and luxury," he explained.

Adidas decided to cut its ties with Kanye West as it condemns actions of antisemitism and other hate speech-related incidents. With the rapper's continuous statements, the company said he violated the company's "values of diversity and inclusion, mutual respect and fairness."