Photo: Getty Images / Hollie Adams
Should Adidas sell, destroy or donate Yeezy sneakers?
Adidas’ move last October to cut ties with Kanye West, now known as Ye, has left it with more than $400 million in the controversial rapper’s Yeezy brand’s footwear and a series of “very complicated” choices in how to make the inventory disappear.
On the one extreme, Adidas could sell the product in a “normal” fashion. However, Bjørn Gulden, Adidas’ new CEO, said Wednesday on the company’s quarterly analyst call that it could lead to reputational risks since Adidas cut ties with Ye following antisemitic comments.
At the other extreme, Adidas could burn or otherwise destroy the product, raising “sustainability issues.” Burberry, Urban Outfitters, H&M, Nike and Victoria’s Secret have been criticized for destroying goods as a clearance method.
“Between that, of course, there are different solutions,” said Mr. Gulden. “We could sell it with a small margin and give the margin away for different donations. We can sell them with more margin and give more donations.”
If the products were sold instead of being destroyed, Ye would be entitled to a portion of the proceeds under his royalty agreement. Adidas, however, would not profit, Mr. Gulden told reporters. He said Adidas is not considering rebranding the Yeezy inventory.
A third option is donating the product, although Mr. Gulden noted that the donated Yeezy styles would likely find their way to the resale market. Before Ye’s antisemitic tirades, the sneakers sold for between $200 and $600 each.
The goal, said Mr. Gulden, is to pick an option that “damages us the least” and “we use to do something good.”
The terminated Yeezy contract is expected to reduce Adidas’s revenues by €1.2 billion in 2023 and cause a loss of anywhere from €500 million to €1 billion, depending on whether the remaining inventory can be repurposed.
Some Jewish leaders, in interviews with The New York Times, saw value in donations to combat antisemitism arriving via Yeezy sales, but others were wary of the message sent should Yeezy products return. Charlotte Knobloch, president of the Jewish Community of Munich and Upper Bavaria, told the Times, “Yeezy products would end up on the streets as if nothing had happened.”
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Adidas results in 2022 reflect geopolitical, macroeconomic, and company-specific challenges –Adidas
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Adidas AG (ADDYY) Q4 2022 Earnings Call Transcript –Seeking Alpha
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Adidas has $500 million worth of Kanye West sneakers and no good options –The Washington Post
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Adidas Is Wondering What to Do With $1.3 Billion in Yeezy Sneakers – The New York Times
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Adidas warns dropping Kanye West could cost it more than $1 billion –NBC News
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Adidas could ‘literally burn’ $500M in unsold ‘Yeezy’ apparel: report –New York Post
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Amazon isn't alone in reportedly destroying unsold goods. –Business Insider
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Why fashion brands destroy billions’ worth of their own merchandise every year –Vox
Discussion Questions
DISCUSSION QUESTIONS: What should Adidas do with its unsold Yeezy merchandise? What lessons does Adidas’ experience hold for other brands and retailers?
Poll
Loading …BrainTrust
Mark Ryski
Founder, CEO & Author, HeadCount Corporation
Neil Saunders
Managing Director, GlobalData
This has turned into a profoundly costly and damaging outcome for Adidas — in terms of financial cost and brand reputation. There does not appear to be any one answer that will please all. Adidas will experience fallout no matter what it does. If you must pick a direction, I would encourage one that tries to make some use of these goods for good purposes — destroying this product would be a monumental waste. The big lesson for all brands is to be cautious with who they align their brands with.
The big message for any company is when getting in bed with celebrities, take great care.
There are no easy answers here. My gut reaction says that giving away the sneakers to good causes, perhaps in countries where people struggle to afford clothes, would be a nice option. However there is always the risk of the sneakers popping up on the resale market. The key thing is that neither Adidas nor Ye should profit.
If they are going to donate, they have “deface” the packaging and products with spray paint or something (with additional cost unfortunately) or else it will flow back to secondary as collectibles. The world is too connected these days for it not to happen.
Do NOT destroy the inventory and compound the waste! Some combination of selling and donating can do some good somewhere. It’s easy for Adidas to make donations. Let’s see what Ye does with his proceeds.
Astonishingly, despite the very public outrage over Kanye West, demand for Yeezy shoes has skyrocketed since Adidas ended their partnership. This creates a bizarre scenario where doing the right thing creates a litigious event due to their fiduciary responsibility to their shareholders. This looks like a no-win situation for Adidas, and a reminder of mama’s caution to be careful who you associate with.
I don’t know what his international following is. Still, I would not want to see one pair of these sneakers on the sidewalks of New York — or anyplace else in the U.S. Adidas can easily find organizations in other parts of the world to donate the footwear to without restraints. Let’s not get caught up in a pair’s perceived “value.” The value is the same for those who need shoes, no matter the brand — they are priceless.
I assure our readers that there is no lack of need for shoes around the world. No more hand-wringing. Like the competition says, “Just do it!”
Right on the mark, Gene. The value of “perception” is fleeting.
Kudos to Adidas for doing the right here, even when doing so comes at a cost. The best course of action, in my opinion, is to make lemonade out of lemons. There are plenty of places on the planet where any shoes, not just designer-branded sneakers, are out of reach. Donate the shoes there. And if some make it into the resale market, so be it. Since the shoes aren’t in retailers, there is very little risk they will wind up being returned for fraud. I think Adidas has done the right thing every step of the way so far — one last good deed and they can walk away from this.
My initial thought is to donate the shoes to a good charity or, as Neil Saunders suggested, to a country where clothing is at a shortage. Another option is to sell them to a discount chain and donate the proceeds to organizations that combat antisemitism. This has certainly put Adidas between a rock and a hard place. There doesn’t seem to be any easy/good answers.
Adidas’ move to end its Ye connection was a branding statement with billion dollar plus consequences, so the follow-up should work toward the same ends. It would add insult to injury to send Ye profits from the sale of his sneakers, in my opinion. So I’d go for “donate all to the needy.” I’m not seeing any other acceptable alternatives.
Donate, donate, donate. This is ethically the best use of this footwear, plus Adidas can take the write off and still come away as responsible, smart, and supportive of the Adidas brand and company!
First of all — they are shoes. Everything else is what is being projected on to them. I come down on the side of karma. You reap what you sow. Sow destruction you reap destruction. Sow generosity and love you get generosity and love.
I’m so pleased to see the “no destruction” stance of my colleagues here and I’d support Gene’s suggestion of Adidas’ sending them to countries where shoes would be a gratefully received luxury. Where they’d simply be good shoes people need. Kanye who?
They should recycle or, more fitting considering what a dreadful human Kanye is, upcycle the Yeezy goods. If they donate them they should handle them the way labels used to handle closeouts, or similar to how record companies used to alter “cut outs.” Diminish the resale value but preserve the utility of footwear and provide the goods to those in need, without the Yeezy brand embellishment.
Easy answer: donate. They’ve already professed their losses to the Street so, do the right thing. We’ve got millions of homeless right now, a pair of Yeezy’s couldn’t hurt.
It would be obscene for Adidas to destroy $400 million in shoes when so many people around the world need footwear.
You are so right, Georganne. This may be TMI, but I was born and raised in the Nigerian desert, the son of missionaries, way back when almost no one had shoes except those lucky enough to make sandals out of an old tire. Though that was 65 years ago it’s strange how you just don’t forget your upbringing. There are still people who haven’t owned a pair of real shoes ever.
That’s an incredible life story, Ian. You should write a book!
You are too kind. I’ve written six, not sure I have the energy for another! 🙂
Your story is one that we all should embrace. The definition of need in the U.S. and Europe is so different than the definition of need in other parts of the world.
You are so right. Way back when I took my kids travelling with me, their greatest trauma in the hotel was “There’s no internet!” Did my loving best to teach them that for a lot of kids it was “There’s no food.” We are blessed beyond measure.
To me the answer is easy. Donate. To a country/continent where they are needed.
Destroying them is an environmental no-no. Selling them is out of the question. No other choice.
The unfortunate partnership between Adidas and Yeezy has impacted the brand from a financial and brand equity perspective. The first instinct would be to destroy the products, considering the negative connotations of the Yeezy brand. However from a sustainability and social responsibility perspective, it would be wise for Adidas to put this behind them and donate the sneakers to a charity organization, not at a profit, and move on from this unfortunate event.
Under no circumstances should perfectly wearable product be destroyed. Full stop.
Breaking down the materials to make other products could be an option but with the complexity of footwear, separating the materials may be difficult.
Donating is the best and only option here. There are millions of people who could benefit. Why not do something “good.”
Yes! “There are millions of people who could benefit.” Maybe billions?
This is the ultimate challenge in making a judgement call. No one can logic their way to a good answer. I expect the best choice would be a donation which makes a statement — but the best one won’t be the most obvious one.
Of course, this is a warning about the serious potential downside of using any celebs or influencers.
This is the classic lose/lose/lose scenario. Destroy them and you are an enemy of the Earth. Selling them really isn’t even an option. And while donating them to homeless shelters, inner city schools, jails or whatever seems like the best choice, you are still putting offensive products into the market which will – without a doubt – end up being sold in the collector’s market. Best bet? Find a way to de-brand the physical product and then donate them. Easier said than done and quite likely an expensive solution but the alternative is to hide them all away in a warehouse. As for lessons, it seems to me Adidas continued to do business with West long after it was painfully obvious that he might not be the most stable spokesperson, so the lessons are vet your endorsers better and cut your ties at the first sign of trouble.
No easy answer to this one. It will have a negative and positive impact depending on the point of view and beliefs. Usually, I would have said let the market play its role, but in this case, I like Gary Sankary’s comment to donate the inventory to a distant needy place where any shoe is needed.
My simple suggestions: 1) Do something to the shoes that make them unsellable, but still useable. 2) Next, donate the shoe to a worthy cause or country. 3) Take a tax write-off.
Adidas would donate the footwear to disaster relief efforts, such as those in Turkey and Syria in the wake of the February earthquake that left more than 46,000 people dead. Alternately, Adidas must come up with a mechanism that can recycle, repurpose, and turn Yeezy brand inventory into material for items like gym floors, training accessories and even additional shoes.
Burning or destroying $300 to $500 million worth of merchandise makes little financial sense and is not a very environment friendly option, as it comes with its own public relations pitfalls. Adidas is leading the way in sustainable fashion and ethical clothing, and must find a way to minimize waste.
The experience of Adidas with Yeezy merchandise holds several lessons for other brands and retailers — the top 2 lessons would be carefully managing inventory levels and product releases and always have a plan for managing excess stock.
If ever there was an example of self-defeating “messaging” it’s the idea that these should be destroyed. They “might find their way to the street” or “be resold”…so ??? Assuming someone even recognized them, I can think of no better message than that they’re cast-offs from a charity.
The lesson is the one that was obvious from Day One:”edgy” is risky…sometimes it blows up in your face.
There needs to be a way to make these shoes un-collectable. Altering or “de-branding” them (Ryan’s idea) and then donating them in less-advantaged parts of the world may be the best course of action for Adidas to deal with this painful conundrum.
This is an extreme and sad example of endorsers gone bad, but the challenge is perennial. In 2004 I wrote about this issue in the sports world for Advertising Age, “Endorser Qualities Count More than Ever.” https://adage.com/article/special-report-sports-marketing/endorser-qualities-count/101114 (registration required).
“The world of celebrity athlete endorsers is a high-cost, high-risk realm where a deal spanning several years and tens of millions of dollars can shatter over a half-hour’s questionable behavior.”
In the instance of Ye, the character problem has been in evidence for years. Adidas must therefore accept an equal share of the blame and the consequences.
Many needy people throughout Sudan and the sub-Sahara regions would be thrilled to have new apparel and footwear. And if we learned anything about the orange welfare coats from the ’60s, DON’T deface the products as it creates a stigma. Sure, mark the soles so they cannot be resold as original but keep it simple. And yes, be diligent in your assessments of future celebrity endorsements; aren’t sports figures bad enough?
Donate seems to be the “best” path. I wonder if Adidas’s leadership discussed this part of the issue when they decided to cut ties. “Well we cannot be associated with this dude anymore, obviously, but what about all our inventory…?”
OMG This is a NO BRAINER! Be Human!!! $400 MILLION Inventory !!!!! Destroying that would be disgusting and horrible! People ALL over the world lack and need footwear— Hello — Northern and eastern Syria— Pakistan (Recent devastating floods) Not to mention so many people with economic difficulties ALL OVER and Probably even here in the US! DOANATE! PLEASE! OK— Make a big deal about it if you feel you (Addidas) need to do that— BUT Give them to needy— If they are even considering destroying them then they have already “lost” this product — so giving it would not be a problem.