In case you haven't noticed, Adidas is struggling right now. Overall, there is a very good reason for this. However, it is still a big problem for the brand. Recently, they had to cut all ties with Kanye West. In the end, he didn't really leave them much of a choice. Although he had made lots of money for them, his moral character was just simply too disturbing to keep around. After a Nazi obsession that had fans cutting him off, Adidas pulled the plug. Consequently, they are feeling the effects.
According to XXL, Adidas released a first-quarter report today. CEO Bjørn Gulden was very upfront and brutally honest in this report. As it stands, Adidas is looking at a $771 million operating loss this year. Moreover, they already have $661 million in lost sales, as well as a $565 million net loss. To make matters even worse, they have $1.3 billion worth of Yeezy products that they can't do anything with. This includes over $500 million in sneakers.
Adidas Is Having A Rough Go Of Things
"The adverse Yeezy impact and negative currency developments weighed on the gross margin development," The Adidas CEO explained. "This could not be offset by the significant positive effect from the price increases the company has implemented…Should the company irrevocably decide not to repurpose any of the existing Yeezy product going forward, this would result in the potential write-off of the existing Yeezy inventory and would lower the company’s operating profit by an additional [$551] million this year."
At this point, Adidas has some very difficult decisions to make. With Yeezy gone from the brand, they will have to reinvent themselves. While some fans will always love the three stripes imprint, the hype is completely gone. Hype is usually unsustainable, and Adidas has figured that out the hard way. Let us know what you think of this, in the comments section down below. Additionally, stay tuned to HNHH for the latest news from around the sneaker world.
[Via]
