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On October 25, Adidas announced that it would terminate the cooperation with American rapper and fashion designer Kanye West (Chinese nickname “Kan Ye”), and the Yeezy product line will immediately stop production and sales, which will generate net income for the company in 2022. The impact of about 250 million euros (about 1.8 billion yuan).
Negative impact on Adidas performance
Adidas said that after a thorough review, it decided to immediately terminate the partnership with Kanye, stop the production of Yeezy products, and stop all payments to Kanye and his company, and stop Adidas Yeezy’s business. After the news was announced, Adidas’s share price fell by 8%, but then recovered. As of the close of the day, Adidas fell 2.45% to $50.10 per share.
The Adidas statement also said the decision is expected to have a short-term negative impact of up to 250 million euros on the company’s net income in 2022.
Some analysts say that Adidas’ Yeezy’s annual sales are about $2 billion, which may account for 10% of Adidas’ total sales, helping the company boost its business in the North American market.
Adidas’ current sales volume is Kanye’s “Yeezy” series. According to Adidas’ data from the last fiscal year, in 2021, the sales of Adidas Yeezy series sneakers will reach nearly 1.7 billion US dollars, a year-on-year increase of 31%, and Yeezy also received 191 million US dollars in copyright fees.
And Adidas 2022 third quarter performance report shows that brand sales increased by 11% year-on-year to 6.408 billion euros (about 45.7 billion yuan), net profit fell 62.6% year-on-year to 179 million euros, and gross profit margin fell to 49.1%. Operating margin slipped to 8.8%.
Among them, the sales performance in Greater China remained weak, recording a double-digit decline. It is worth noting that this is the sixth consecutive fiscal quarter for Adidas to decline in revenue in Greater China. Adidas without the Yeezy series, or worse.
Yeezy series prices may rise in the future
Before 2020, the popularity of speculating shoes was exuberant, and the sneaker transaction with several times the premium in the secondary market made the experts in the circle make a lot of money, and also made the envious outsiders pour in.
In 2015, the Yeezy series was born. Especially during 2016, the Yeezy350 became popular, and the price of the secondary market can soar to more than $750. But now through the app platform of fried shoes, it can be seen that the price of this shoe has dropped significantly. Large, generally living in the price range of $150-500.
A “shoe-frying customer” who has many years of “experience in frying shoes” told reporters: “Yeezy’s shoes are now very hyped, and there is basically no profit at all, mainly because the market is very large, and all kinds of colors and models are available. Yes, without scarcity, the price will naturally not go up.”
The reporter noticed that taking the Yeezy 350 V2 “white zebra” color scheme of size 42 as an example, the resale price of the first release version in 2016 was more than $300 in a fashion shoe app, but the resale price of the 2022 version has hovered around $300. Some yardages are even lower than the launch price.
The above-mentioned “shoemaker” told reporters: “However, Adi and Kanye do not cooperate, and the follow-up Yeezy product line will stop production, which will inevitably lead to an increase in the scarcity of Yeezy. Shoes are consumables, and prices may rise after a period of time.”
Judging from the data, data agency WANTD said that sales in Yeezy’s secondary market seem to have picked up. Nine of the top 25 sneakers on Tuesday morning were Yeezys, up from six last week.
Will the Yeezy series usher in a new round of hype? Cover news reporters will continue to follow.
Brands have cut their seats
According to the latest statement released by Adidas, Adidas has decided to immediately terminate the partnership with Kanye, stop the production of Yeezy-branded products, and stop all payments to Kanye and his company. Adidas will cease operations of Adidas Yeezy with immediate effect.
Adidas said in a statement that “Kanye’s recent remarks and actions are unacceptable, hateful and dangerous and violate the company’s values of diversity and inclusion, mutual respect and fairness.” Adidas isn’t the only brand to cut its footing with Kanye. GAP ended its partnership in September, and European fashion house Balenciaga cut ties with Kanye.
In addition, Kanye’s personal account has been limited by social media, and his personal Twitter account has not been updated since October 9. Kanye’s acting career has also been limited, with news of shows being cancelled and personal documentaries being put on hold. Kanye is one of the most important figures in contemporary European and American pop culture. As a singer and music producer, Kanye holds 24 Grammy Awards and 7 US Billboard No. 1 albums. As a fashion designer, the Yeezy brand that Kanye collaborates with Adidas is its most successful brand.
According to media reports, Kanye’s lawyers did not respond to a request for comment about Adidas’ cessation of cooperation.
Adidas short-term losses may reach 250 million euros
Since poaching Kanye from Nike in 2013, Adidas has partnered with Kanye to produce a number of Yeezy-branded sneakers. The sneakers, priced between $200 and $700, were dubbed “Yeezy shoes” by the shoe circle and became synonymous with the trend, helping Adidas close the gap with Nike in the U.S. market.
According to estimates by consulting firm Telsey, Yeezy generates annual sales of 1.5 billion euros for Adidas, accounting for about 7% of its annual revenue. Adidas also said in a statement released on October 25 that it is expected to have a short-term negative impact of up to 250 million euros on the company’s net profit in 2022, taking into account the seasonal peak season in the fourth quarter. After the news was released, Adidas had the largest intraday drop of more than 7%.
In the domestic market, the Yeezy brand is also the “hard currency” in the frenzy of shoe speculation in previous years. In 2015, when the Yeezy series was just released, shoe sellers could recover three or four times the income of the sale price when they changed hands. At that time, some Yeezy shoes were even fired to 100,000 yuan.
On the evening of October 25, the reporter tried to search for Yeezy series products on Adidas Tmall, Jingdong flagship store, and the official Adidas app, but all showed “no matching products found”. On Xianyu, Dewu and other trading platforms, searching “Yeezy” can still find a large number of shoes, and achieve a large number of transactions.
Taking the Yeezy Boost350 V2 “Beluga Reflective” as an example, according to the data disclosed on the Dewu platform, this shoe with a reference sale price of 1999 yuan sold over 100 orders within 3 hours, and the price fluctuated violently. According to different shoe sizes, the transaction price Covers various price segments from 1439 yuan to 2249 yuan.
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