Adidas cut ties with Ye a year ago, but the controversies keep coming. Here's a history of the brand's decade-long relationship with Kanye West.
By Andrew DixonOctober 28, 202314 mins read75 Views
Adidas announced an endorsement deal with Kanye West in November 2013.
By 2019, Adidas sales of his Yeezy brand eclipsed $1 billion annually.
In October, in the wake of antisemitic comments, Adidas ended the partnership.
In November 2013, Adidas sales in North America, the most critical territory for sportswear sales, were down 1% for the year. Across the company, sales were flat.
The company had just five shoes on the influential Complex list of best 50 sneakers of 2013. Industry leader Nike had 30 shoes on the list and had just reported an 8% annual sales increase.
But that same month, Adidas announced a partnership with Kanye West, the polarizing musician and fashion designer, now known as Ye.
Three years later, Adidas reported an 18% annual sales increase, more than doubling Nike's fiscal-year percentage gain. Yahoo Finance named Adidas Sports Business of the Year, citing a string of hot products, including the NMD, Ultra Boost, and West's Yeezy, and the company's ability to capitalize on a consumer shift away from performance products to more casual athleticwear.
While analysts debated West's role in the company's resurgence, Mark King, who was the president of the North America division at the time, gave credit to the artist.
"I think Kanye definitely helped make the brand cool again," he told Yahoo Finance in 2016. "But I think, had it only been Kanye, it would have gone up and gone down very quickly."
By 2019 West had started referring to himself as "Ye" — legally changing his name to it in 2021 — and Adidas sales of Yeezy products had surpassed $1 billion for the first time. But Ye's relationship with Adidas had also started to deteriorate.
In a 2018 interview with TMZ, Ye said slavery "sounds like a choice," prompting Adidas' CEO, Kasper Rorsted, to defend him on CNBC. More criticism followed after Ye wore a "Make America Great Again" hat on "Saturday Night Live" and met with then President Donald Trump in the Oval Office.
Despite the turbulence, Adidas Yeezy sales continued to grow. In February 2021, the financial-services company UBS projected sales would hit $2 billion for the year and would continue climbing, according to an internal document viewed by Insider.
But Ye's partnership with Adidas ultimately ended on October 25, 2022, after the artist made repeated antisemitic comments. Adidas cut ties and said it would immediately bring the Yeezy business to a halt, with the company expecting its bottom line to take a $247 million hit for the year. Adidas would later reveal that losses in 2023 could mount to $750 million, if unsold Yeezy inventory was destroyed.
"Adidas does not tolerate antisemitism and any other sort of hate speech," the company said at the time. "Ye's recent comments and actions have been unacceptable, hateful and dangerous, and they violate the company's values of diversity and inclusion, mutual respect and fairness.
Morningstar analyst David Swartz said at the time that the end of the deal was significant but that the long-term impact on the brand is less clear. Adidas still owns its Yeezy designs and the company remains more of a sportswear than a streetwear brand. Swartz noted that for Adidas and its competitors, China remained a bigger problem than any single endorsement deal because Western brands are falling out of favor with Chinese consumers.
Analysts expected Nike to get a short-term boost, given its dominance of the market for hyped sneakers.
"If all of a sudden that customer who was buying a couple pairs of Yeezys every year now finds themselves with a few 100 extra dollars in their budget every year, the most likely direction they're going to go with that money is Nike: the Jordans and the Dunks," Tom Nikic, a Wedbush analyst, previously told Insider.
At the end of 2022, Adidas confirmed speculation and named the former Puma CEO Bjørn Gulden the next CEO of Adidas. Among Gulden's accomplishments at Puma: building the brand's credibility with celebrities ranging like Rihanna and Jay-Z.
About five months into the job, Gulden has proven to be very direct with analysts and media, mentioning archrival Nike multiple times on earnings calls. His growth strategy at Adidas involves a renewed emphasis on wholesale and leveraging classic silhouettes like the Samba to regenerate growth.
"We think this is one of the best hires they could make," Nikic wrote in a previous note to investors when Gulden's hire was announced.
Below is a timeline of Ye's relationship with Adidas.
2013
Adidas and Kanye West announced their partnership in November 2013 after West said he severed his deal with Nike because the company refused to pay him royalties on Yeezy sales. West appeared to break the news of his new deal with Adidas on a New York City radio station.
"Nike told me, 'We can't give you royalties because you're not a professional athlete,'" West said on Hot 97. "I told them, 'I'll go to the Garden and play one-on-no-one.' I'm a performance athlete."
Adidas ended 2013 with North American sales down 1%.
2014
Anticipation started to build for the debut of West's first sneaker with Adidas. Despite rumors of a potential summer or fall launch, the shoe, later known as the Yeezy 750, would not be released until 2015.
Nike, however, shocked sneakerheads everywhere by quietly dropping its final collaboration sneaker with the rapper — the Nike Air Yeezy 2 "Red October" — in February 2014. The $245 shoes sold out in just 11 minutes, according to the Portland Business Journal. The sneakers, which were bright red and featured a strap on top, resell in most sizes on StockX and Goat for over $15,000 a pair.
2015
After much anticipation, West and Adidas released their first collaboration sneaker — the Yeezy Boost 750 in February 2015. The Yeezy 750 featured a suede upper, mid-foot strap, and full zipper running up the back heel.
2015 also marked the debut of the Yeezy 350 model in multiple colorways, including the infamous "Turtle Dove" sneaker. The 350 shoes featured both Adidas Primeknit woven technology on the upper part of the shoe and Boost, an extra layer meant to add comfort to the midsole.
Overall, 2015 was a great year for West. Footwear News named the Yeezy Boost 350 shoe of the year, and he was named one of Time magazine's most influential people. He brought much-needed hype to Adidas' original sneakers like the Ultraboost.
In 2015, Adidas would launch its Confirmed app for sneakerheads to get the latest hype sneakers from the brand.
2016
As the popularity of West's Yeezy line grew, Adidas struck a new deal with the rapper and designer to run through 2026. Adidas would describe the deal as the "most significant partnership between a non-athlete and a sports brand."
For its efforts, Adidas in December was named sports business of the year by Yahoo Finance after the company reversed a streak of US market-share losses. In addition to Yeezy, Adidas had found success with the Ultraboost and NMD sneaker models. Both were popular with fans because of their comfort and modern look.
2017
Yeezy dropped the "Wave Runner" 700, a chunky, multicolor sneaker, for a retail price of $300 in the summer of 2017. The shoe, which implemented Adidas's new Boost technology, became one of the most popular Yeezys ever released thanks to its "dad shoe" silhouette.
Adidas also officially passed Nike's Jordan brand and became the No. 2 sneaker brand by market share, according to NPD Group. Nike, the industry leader, remained at No. 1.
Meanwhile, in a sign of his faith in Adidas, West gifted his then wife, Kim Kardashian, $200,000 of Adidas stock for Christmas.
2018
In May, West said slavery "sounds like a choice" during an interview with TMZ. While West had always pushed the envelope with his music and other projects, this was the first time Adidas CEO Kasper Rorsted had to justify the company's relationship with the artist.
"Kanye has helped us have a great comeback in the US," Rorsted said on CNBC's "Squawk on the Street." "There is no doubt the Yeezy brand has a fundamental impact on our overall brand."
Ye also visited President Trump at the White House in a "Make America Great Again" hat and partially credited him for his move to Adidas. "You gave me the heart to go to Adidas. This Adidas thing made me a billionaire," West said.
2019
With the popularity of Yeezys climbing, the company's first annual "Yeezy Day" ignited a frenzy on social media. Many sneakerheads ended the day frustrated about not getting their favorite hyped pairs. West would publicly call out Adidas three years later for creating Yeezy Day without his approval.
Adidas Yeezy sales topped $1 billion for the first time in 2019, hitting $1.3 billion.
The success of the Yeezy line prompts West to want to take his relationship with the brand to the next level by becoming its creative director.
Thanks largely to the Adidas partnership, West went from $53 million in debt in 2016 to earning $150 million (pretax) roughly three years later.
2020
Adidas sold nearly $1.7 billion in Yeezy products in 2020.
In September, West asked for a seat on Adidas' board of directors and said he'd wear Jordans until it happened.
Ye also announced on Independence Day that he would run for president. Federal Election Commission documents filed by the celebrity in October showed he valued his three businesses, Yeezy LLC, Yeezy Apparel LLC, and Yeezy Footwear LLC, at $50 million each.
West also disclosed that his financial relationship with Adidas is worth between about $25 million and $50 million, but reports indicated he was making well over $100 million a year just off royalties from Adidas.
2021
By the end of 2021, Adidas North American sales jumped 17% to $5.1 billion. The company's Yeezy line remained its most-hyped product in a celebrity lineup that included Beyoncé, Pharrell Williams, and as of March, Bad Bunny.
West, who officially changed his name to Ye in 2021, was also involved in a notable legal battle involving his Yeezy "Foam Runner" design.
The "Foam Runner" debuted unexpectedly in summer 2020 and quickly became a must-have casual-footwear item. Similar to the Yeezy Slide, the "Foam Runner" became popular for resellers looking to flip Yeezys, as both sold for under $90 retail and could go for double or triple the price on secondary markets.
Ye would sue Walmart in June for selling knockoff versions of the shoe priced at around $20 to $30. Both parties later settled for an undisclosed amount.
June 2022
Ye accused Rorsted of ripping off his Yeezy Slide design to create the company's Adilette slide. The rapper later took to social media to call them "a fake Yeezy" and demand Rorsted speak with him.
"I'm not standing for this blatant copying no more," he said on Instagram. "To all sneaker culture To every ball player rapper or even if you work at the store This is for everyone who wants to express themselves but feel they can't cause they'll loose their contract or be called crazy."
September 2022
Ye's feud with Adidas and Rorsted escalated, with Ye mocking Rorsted after the executive announced plans to retire at the end of 2022. The rapper and designer posted a fake New York Times cover story on his Instagram, with the headline "Kasper Rorsted also dead at 60."
Soon after, Ye told a Bloomberg reporter he planned to end his existing corporate partnerships and "go it alone." Days later, Ye ended his deal with Gap.
October 2022
Adidas announced its relationship with Kanye West was under review after a series of public comments the rapper made against the company.
Ye also sparked outrage after he wore a "White Lives Matter" T-shirt on October 3 during Paris Fashion Week. Days later, Twitter and Instagram closed Ye's accounts after he posted antisemitic remarks.
As Adidas began to face mounting public pressure to drop Ye, the rapper told hosts of the "Drink Champs" podcast, "The thing about me and Adidas is like, I can literally say antisemitic s**t, and they can't drop me. I can say antisemitic things, and Adidas can't drop me. Now what? Now what?"
Adidas had explicit ties to Germany's Nazi party in the past. The German sportswear giant would eventually terminate its deal with Ye on October 25, saying it "does not tolerate antisemitism and any other sort of hate speech." The meeting in which Adidas executives decided to cut ties with Ye lasted just two minutes, Bloomberg reported.
In a statement, Adidas said it expected its bottom line to take a $247 million hit for the year. It also pulled remaining Yeezy products from shelves. Retailers, including Foot Locker, also pulled Yeezy products per Adidas' request.
November 2022
In November, Adidas confirmed Bjørn Gulden would be the brand's next CEO. The announcement was well received by investors given Gulden's track record as CEO of Puma, where he boosted growth and worked with celebrities like Rihanna and Jay-Z.
On the downside, Adidas announced quarterly earnings and halved its earnings forecast for the year, citing the end of the Yeezy partnership and challenges in China. But Adidas Chief Financial Officer Harm Ohlmeyer reiterated the company owned the designs it made in partnership with Ye and could release more in 2023.
Negative headlines continued. The Wall Street Journal reported the Adidas executive board heard a presentation in 2018 about the risks of being associated with Ye. Rolling Stone published a sweeping look at the Yeezy business and described it as a toxic workplace.
Meanwhile, Ye worked to rebuild his brand and business. After Balenciaga, Adidas, and Gap cut ties with him, Ye told the celebrity news site X17 that he's selling hoodies from the companies for $20. He also said he's running for president in 2024. Ye previously ran for president in 2020, but he only hosted a single campaign rally and got 70,000 votes.
February 2023
In February, Adidas gave investors details on the expected financial hit from ending the Yeezy business, including the need to possibly write off more than $500 million in inventory if it destroyed its remaining Yeezy inventory, meaning it would forego more than $1 billion in sales.
The company also said it planned to spend more than $200 million on a comprehensive strategic review. S&P downgraded Adidas' credit because of its financial woes.
"The numbers speak for themselves. We are currently not performing the way we should," Gulden said, in a press release. "2023 will be a year of transition to set the base to again be a growing and profitable company."
The company's problems with celebrity partnerships didn't end with Ye. That same month, the Wall Street Journal reported Adidas' sales of Beyoncé's Ivy Park line were coming up short of sales projections, decreasing more than 50% to $40 million in 2022, despite a $250 million sales forecast.
March 2023
Gulden came out swinging in his first earnings call as Adidas CEO, even taking a shot at archrival Nike.
Gulden laid out important pillars of his growth strategy for Adidas, including a re-emphasis on wholesale and relying more on the company's vault of classic sneaker designs.
He even defended Adidas' innovation in its performance line. Adidas had recently introduced new offerings like the company's Adizero running shoes and "Predator" soccer cleats. He also asked analysts "what was the last innovation that Nike?" in performance.
However, he had no answer for the burning question on analysts' minds. What was the company going to do with leftover Yeezy inventory? Gulden said the company had still not made a decision, and the solution was not as simple as donating it.
May 2023
Adidas announced it will sell its leftover Yeezy inventory beginning at the end of May.
In a press release, Adidas unveiled some of the silhouettes and colorways that it will restock. The first is expected to be the Adidas Yeezy Boost 350 "Pirate Black," a shoe that was last released in 2016.
Selling the stock was preferred over destroying the inventory or donating it outright, the company said. Much of the proceeds will be given to charity, the company said. Ye is also expected to receive 15% of profits in royalty payments, according to reports.
Ye has been busy in May. He has reportedly leased office space in Los Angeles next to an Adidas store. Ye has also filed a trademark for Yeezy "sock shoes," which hints at a future release.
August 2023
Adidas released another batch of Yeezy shoes, continuing its effort to offload inventory from the partnership.
The company said it would continue donating portions of sales to social justice organizations including the Philonise & Keeta Floyd Institute for Social Change and the Anti-Defamation League.
"As previously communicated, adidas will donate a significant amount to selected organizations working to combat discrimination and hate, including racism and antisemitism," it said in a July press release.
October 2023
One year after the Yeezy partnership ended, the New York Times published a bombshell investigation based on hundreds of previously undisclosed internal records and interviews with current and former employees of Adidas and Kanye West.
The story reveals how the relationship between the hip-hop star and the German company was fraught from the beginning, when Ye reportedly showed his distaste for a proposed sneaker design by drawing a swastika on it - a symbol that is outlawed in that country.
As sales ballooned for Yeezy products, so did West's chaotic and controversial behavior, leading a group of Adidas executives in 2018 to form a "Yzy hotline" group text in which they could coordinate their response, the Times reported.
"Adidas can't drop me. Now what?" West said in a podcast appearance on October 15, 2022. A week later, it did.
Read the original article on Business Insider
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By: [email protected] (Danni Santana,Matthew Kish,Dominick Reuter) Title: Adidas cut ties with Ye a year ago, but the controversies keep coming. Here's a history of the brand's decade-long relationship with Kanye West. Sourced From: www.businessinsider.com/kanye-wests-turbulent-9-year-history-with-adidas-2022-11 Published Date: Fri, 27 Oct 2023 16:12:39 +0000