Adidas’s Strategic Move: Selling Remaining Yeezy Sneakers

Adidas, the renowned sportswear giant, has unveiled its strategic plan to offload the remaining inventory of Kanye West’s Yeezy sneakers. Valued at nearly $300 million, the company aims to execute this move without incurring any financial losses.

Pricing Strategy: Selling at Cost

In a press release issued on Wednesday, Adidas announced its intention to price the remaining Yeezy products at least at their production cost in 2024. This decision reflects a deliberate effort to ensure cost recovery without compromising profitability.

Inventory Management Revisited

Initially, Adidas had anticipated writing off approximately 300 million euros ($324 million) worth of Yeezy inventory. However, the company has revised its approach and now plans to retail around 268 million euros ($289 million) worth of its remaining stock. This strategic pivot underscores Adidas’s commitment to efficient inventory management and financial prudence.

CEO’s Confidence: Consumer Research Insights

CEO Bjørn Gulden, who assumed his role a year ago, expressed confidence in the company’s ability to execute this strategy successfully. Drawing on consumer, retail, and trade research insights, Gulden believes that the remaining inventory can be sold at cost, thereby aligning with market demand and consumer preferences.

Charitable Initiatives: Prior Commitments

Adidas’s decision to sell off the remaining Yeezy inventory follows its decision to sever ties with Kanye West in October 2022, amidst a series of controversial statements made by the rapper. Despite this, Adidas had previously pledged to donate proceeds from Yeezy sales to charitable organizations, including the Anti-Defamation League and the Philonise & Keeta Floyd Institute for Social Change.

Financial Projections: Focus on Cost Recovery

In terms of financial projections, Adidas emphasizes its commitment to selling the remaining stock at cost rather than for profit. The company’s 2024 guidance hinges on this approach, reflecting a strategic shift in its operational focus.

Strong Performance: Optimism Amidst Challenges

Despite challenges such as currency fluctuations, including the devaluation of the Argentine Peso, CEO Bjørn Gulden remains optimistic about Adidas’s future performance. He anticipates sales growth in 2024 and projects an operating profit of approximately 500 million euros for the company.

In summary, Adidas’s strategic decision to sell off its remaining Yeezy inventory at cost underscores its commitment to financial sustainability and corporate responsibility. By aligning pricing strategies with market realities and consumer insights, the company aims to navigate challenges effectively while maintaining its philanthropic endeavors.