Yeezy fervour: Adidas to earmark part of €400 million revenue to anti-hate groups

Adidas brought in €400 million from the first release of Yeezy sneakers left over after breaking ties with Ye.

The sportswear maker will donate part of the proceeds to groups fighting antisemitism and other forms of hate.

The first batch of shoes released in June, which sold out, helped the company reach an operating profit of €176 million in the second quarter, better than it originally planned, according to Adidas.

A second sale started on Wednesday.

Ye’s antisemitic and other offensive comments led the company to end its partnership with the rapper last October.

After this, the future of trainers was unclear.

On the resale market, where Yeezys were selling several times above their regular price, buyers seemed to have lost interest in the shoes.

However, Adidas decided to go ahead with the sale seeking a way to dispose of €1.2 billion worth of the high-end shoes in a responsible way.

“We will continue to carefully sell off more of the existing Yeezy inventory,” said CEO Bjørn Gulden, who took over in January.

“This is much better than destroying and writing off the inventory and allows us to make substantial donations to organizations like the Anti-Defamation League, the Philonise & Keeta Floyd Institute for Social Change and Robert Kraft’s Foundation to Combat Antisemitism,” Gulden said.

Adidas has already handed over €10 million to the groups and expected to give an additional €100 million, with further donations possible depending on how future sales go, Chief Financial Officer Harm Ohlmeyer said.

The Adidas CEO said the Yeezy sales are “of course also helping both our cash flow and general financial strength.”

The first sale unloaded roughly 20% to 25% of the Yeezy sneakers that were left stacked up in warehouses, contributing €150 million of Adidas’ €176 million in operating earnings in the April-to-June quarter.

Adidas also warned that the first sale included the highest-priced shoes and sold out completely but that it wasn’t clear whether the remaining releases would see similar price levels and demand.

Brands cutting off Ye

The blow-up of the Ye partnership put Adidas in a precarious position because of the popularity of the Yeezy line, and it faced growing pressure to end ties last year as other companies, such as the luxury brand Balenciaga, cut off the rapper.

The torn-up contract was now in arbitration, “a process that is being taken care of by legal people” for both sides and was surrounded “by a lot of uncertainty,” said Gulden, the Adidas CEO.

Asked whether it must pay Ye royalties on the shoes, the company has said only that it will observe all its contractual obligations.

On the amount of money given to anti-hate groups, Adidas said the donations were not a fixed percentage of sales but that it had discussed with the recipients what an appropriate amount would be.