- Adidas ends the partnership immediately
- To take ~ $250 million hit net income for 2022
- Adidas sole owner of the design rights
Oct 25 (Reuters) – Adidas AG (ADSGn.DE) The sporting goods maker said Tuesday it will immediately end its partnership with Kanye West, in response to a series of aggressive behavior from the American rapper and designer.
The decision comes after Adidas, which has produced several Yeezy-branded sneakers, was put under review earlier this month after its efforts to privately resolve the issue.
“Adidas does not tolerate anti-Semitism and any other type of hate speech,” the German company said.
“Yi’s recent comments and actions are unacceptable, hateful, dangerous and violate the company’s values of diversity, inclusion, mutual respect and fairness,” she said, referring to the rapper by his legal name.
A lawyer representing Yi did not respond to a request for comment.
Terminating the partnership and producing Yeezy-branded products, as well as stopping all payments to Ye and his companies, would have a “short-term negative impact” of up to €250 million ($248.90 million)” on Adidas’ net income for the year, the company said.
Yi has sparked controversy in recent months by publicly ending big business ties and due to social media revolts against other celebrities. His Twitter and Instagram accounts were restricted, as social media platforms removed some of his online posts that users described as anti-Semitic.
In a now-deleted Instagram post earlier this year, the Grammy-winning artist accused Adidas and US clothing retailer Gap Inc. (GPS.N) From failing to build contractually promised permanent stores for products from his Yeezy fashion line.
He also accused Adidas of stealing his designs for its own products.
On Tuesday, Gap, which ended its partnership with Ye in September, said it was taking immediate steps to remove Yeezy Gap products from its stores and that it had closed YeezyGap.com.
Gap said in a statement. The company was selling existing Yeezy Gap shares until the sale period.
European fashion house Balenciaga has also cut ties with Yi, according to media reports.
“Epic Ye… emphasizes the importance of scrutinizing celebrities and avoiding those who are overly controversial or unstable,” said Neil Saunders, managing director of GlobalData.
Adidas hunts Ye from rival Nike Inc (NKE.N) in 2013 and they agreed on a new, long-term partnership in 2016 in what the company called at the time “the most important partnership ever created between a non-sportsman and a sports brand”.
The association helped the German brand close the gap with Nike in the American market.
Yeezy sneakers, which cost between $200 and $700, generate about 1.5 billion euros ($1.47 billion) in annual sales for Adidas, and make up just over 7% of its total revenue, according to estimates by Telsey Consulting Group.
Shares of Adidas, which lowered its full-year forecast last week, closed 3.2% lower. The group said it would provide more information as part of its expected third-quarter earnings announcement on November 9.
(1 dollar = 1.0044 euros)
Additional reporting by Mrinmay Day, Uday Sampath and Aishwarya Venugopal in Bengaluru; Editing by Tomasz Janowski, Sriraj Kalovila, Bernadette Bohm and Anil de Silva
Our criteria: Thomson Reuters Trust Principles.
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