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Adidas CEO warns donating Yeezys could backfire as the company struggles to get rid of its $1.3 billion stockpile

Danni Santana   

Adidas CEO warns donating Yeezys could backfire as the company struggles to get rid of its $1.3 billion stockpile
  • Adidas has many options on what to do about its Yeezy Inventory, though none are particularly good.
  • CEO Bjørn Gulden told analysts that even donating Yeezys may be risky, as people could sell them.

Adidas is still unsure about what it will do with its leftover Yeezy inventory.

What the company does know is that there isn't a great option on the table. Burning the inventory is bad for the environment and would cost $526 million in losses. Selling the inventory to customers may cause severe reputational damage to Adidas, which is already in the middle of a brand reset.

Adidas can also donate profits of new Yeezy sales to charity or donate the shoes to survivors of last month's earthquake in Syria and Turkey. But it's not that simple, CEO Bjørn Gulden told analysts on a company earnings call on Wednesday.

"The people that are saying send the shoes to Turkey or somewhere where people don't have shoes or there has been a tragedy happening, I think you agree that these are not normal shoes," he said.

If the shoes were donated, "they will come back again." Yeezy's are more valuable than typical sneakers due to the history of the partnership.

"The value of the product is not the physical value of the ingredients," he said. "It's a brand and merchandise that is sold at a high price."

Gulden is seemingly talking about individuals who could resell donated pairs, potentially at current resale prices on StockX or Goat. Since Adidas cut ties with Ye in October, prices on secondary marketplaces for Yeezys have increased as popular models like the Yeezy Foam RNNR may not release again.

Adidas did not immediately return Insider's request for comment.

Gulden admitted that he has received hundreds of offers from people looking to buy the leftover inventory since he took the helm in January.

"I can tell you since I started here, I probably got 500 different business proposals from people who would like to buy the inventory," he said. "But again, that will not necessarily be the right thing to do."

Adidas will choose the option that does the least amount of damage to the company going forward, he said. The German company expects 2023 to be a "transition year," Gulden said on a separate call with journalists. Currency-neutral sales are expected to decline in the "high-single digits" in 2023, with operating profits breaking about even after potentially taking a $750 million hit.

The Yeezy business is now lost, according to Gulden. But he credited both Ye's creativity and Adidas' go-to market strategy for the franchise's success.

The question now is where Adidas goes from here in terms of generating brand heat. For Gulden, the answer could be Adidas classics, namely the Samba, but also silhouettes like the Gazelle and Spezial.

"We currently have maybe the hottest shoe in the market… and it's the Adidas Samba," Gulden said.

"And you have seen it for a while, I would say in fashion shows and also on celebrities that have actually bought the shoes themselves," he added. "It's hot in Asia, hot in Latin America, hot in Europe, and in America, and I can't remember the last time I saw that. So look for the Samba, look for the Gazelle, and ironically also the Spezial, which was actually a handball shoe that even I used when I was playing, which probably tells you how old I'm getting."

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