a group of investors filed a class-action lawsuit against Adidas

Earlier this month, a group of investors filed a class-action lawsuit against Adidas, blaming the company for knowing about Ye’s problematic behavior years before cutting ties with him and ending the collaboration. Adidas denied the allegations. Shares in Adidas fell as much as 8% after the announcement but have since pared their losses. Now Bjorn Gulden, who took over Adidas in January, is trying to steady the German company, and the sudden loss of a profitable line is only one of his problems. Last year, sales in China, its biggest market, fell more than 35 percent as the country extended its lockdown to curb Covid, and the decision to pull out of Russia after the invasion of Ukraine cost it 59 million euros (about $62 million). It is also losing market share to Nike and other rivals. Adidas announced its partnership with Kanye West in November of 2013. The first Yeezys debuted in February of 2015. The shoes surged in popularity, even as the rapper came under fire in 2018 over remarks he made about slavery. The shoe and apparel brand announced its intentions to keep selling Yeezy products — which were created by Ye, formerly known as Kanye West — in a quarterly earnings call Wednesday. If Adidas does sell the shoes, it would put an end to months of back-and-forth as the shoe brand weighed possible solutions — none of which would leave the company unscathed. Options included rebranding the distinctive sneakers, liquidating them or donating them in some form.

We need to put the pieces back together again, but I am convinced that over time we will make Adidas shine again, Gulden said. “But we need some time.” Adidas drew widespread criticism last fall for taking over a week to sever the deal with Ye, after he said on a podcast: “I can say antisemitic things, and Adidas can’t drop me. Now what?” They couldn’t sell stuff because stores kept closing, so they’ve been shipping stuff back to Adidas and the company is flooded with stuff they can’t sell, Swartz said. Adidas’ deal with the Chicago native officially started in 2016, with the company at the time calling it “the most significant partnership ever created between an athletic brand and a non-athlete.” Adidas’ deal with West officially started in 2016, with the company the time calling it “the most significant partnership ever created between an athletic brand and a non-athlete.” Baird senior research analyst Jonathan Komp said he expects Adidas to release the new styles under its “Originals” business as it sees to stem the impact on its business. After cutting ties with Kanye West, the company faces a financial and ethical dilemma over the profit-driving sneakers Even as the company looks to expand its soccer, running, outdoor and golf lines, Mr. Gulden said, he remains hopeful that collaborations with social media influencers and pop culture stars, including Beyoncé and Pharrell Williams, will pick up this year. They are part of the company’s lifestyle sector, which in recent years has been key to boosting Adidas’s popularity with wider audiences, especially in the United States.

One risky strategy could be to try to reclaim the narrative. If “transparency” is the true goal, some say adidas originals store should not shy away from tying the sneakers to Ye’s comments, or hiding its own brand history. (Though the founding of Adidas predates Nazi Germany, the two German brothers who started the company ended up playing active roles in the party, with one coaching Hitler youth sports). The company faced pressure to cut ties with Ye, with celebrities and others on social media urging Adidas to act. It said at the beginning of the month that it was placing its lucrative sneaker deal with the rapper under review. “If we sell it, I promise that the people who have been hurt by this will also get something good out of this,” Mr. Gulden said. He did not elaborate, but added that donating the proceeds would make more sense than just giving away the shoes, which have an outsize value on the resale market among collectors and other fans. Before last year’s uproar, Yeezy sneakers often sold for hundreds of dollars a pair. Greenblatt said Adidas is set to release a shoe from the line in the “run-up to the anniversary of the Pittsburgh synagogue massacre on Oct. 27 – the most violent antisemitic attack in U.S. history.” In 2018, a gunman opened fire on the Tree of Life Synagogue in Pittsburgh, killing 11 men and women for being Jewish. Ye first said he wanted to leave Adidas last June, when he accused the company of launching a shopping event called Yeezy without his knowledge.

He will continue to own Yeezy, which he launched in 2016, as well as control trademarks for the brand. A spokesperson for Campaign Against Antisemitism said: “adidas shoe on sale has finally joined other brands and agencies and cut ties with Ye (Kanye West). This would not have happened without the almost 175,000 who signed our petition and the celebrities and influencers on both sides of the Atlantic and around the world who helped promote it and amplified the message.” Adidas, which was criticized for not acting quickly enough, described his comments and behavior as “unacceptable, hateful and dangerous, and they violate the company’s values of diversity and inclusion, mutual respect and fairness.” In December 2020, Adidas announced a partnership with Fear of God founder Jerry Lorenzo, who left the swoosh brand Nike for the three stripes. But besides one yellow hoodie and Lorenzo distancing himself from an Adidas Basketball campaign in December 2022, the highly anticipated partnership has generated little buzz. However, the designer and the brand expected to be “sharing more in the first half of 2023.” I can confirm that Adidas is the sole owner of all design rights related to existing product, as well as previous and new colorways under the partnership, Adidas Chief Financial Officer Harm Ohlmeyer said during the call. “We intend to make use of these rights as early as 2023.”

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