A Billion-Dollar Divorce? How a Potential Adidas-Kanye West Split Could Hit the Athletic Brand’s Sales

Peter Verry
·5 min read
15

Adidas and Kanye West — one of the industry’s most storied and successful partnerships — could end much sooner than expected. And now insiders are pondering what the athletic brand’s future could look like without Ye.

After a dramatic week following West’s controversial Paris Fashion Week show for Yeezy SZN 9, Adidas said on Thursday is was placing the deal “under review” after attempting to resolve the situation privately. (West spent the past month bashing Adidas and its executives on social media, signaling his own intentions to sever the deal.)

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“For a brand to come out and say that, I’ve never seen that before,” said lawyer and professor Jared Goldstein, who is also the co-author and co-creator of “Sneaker Law.” “The deal has to be in serious jeopardy.”

Adidas’ announcement comes as negative headlines involving West dominate the news cycle. Since the Monday show, the rapper has doubled down on his “White Lives Matter” stance and lambasted top fashion and music industry players on Instagram. On Thursday night, he appeared on Fox News’ “Tucker Carlson Tonight” to defend his views once again.

But despite all of the negative attention, industry insiders believe separating from his Yeezy imprint could prove costly for the German athletic powerhouse, which has experienced a number of issues in recent months, including a sudden CEO departure and a hit to sales due to closures in China and its Russia business.

The Yeezy relationship began in 2013, and three years later was extended to 2026. The first product to hit the market — the Adidas Yeezy Boost 750 and the Adidas Yeezy Boost 350 — arrived in 2015, which earned West and Adidas the FNAA Shoe of the Year honors.  

While Adidas does not break out Yeezy sales numbers, Morningstar analyst David Swartz estimates the brand brings in close to $2 billion a year. Swartz projects overall Adidas revenues to hit $23 billion this year, which would make Yeezy sales represent nearly 10% of the total.

“Yeezy certainly was a big factor in Adidas’ growth in North America over the last five or six years, and it is a sizable chunk of their sales, especially in North America,” Swartz said. “And it provides Adidas with a viable product line in the collector market where it trails Nike by a substantial amount.”

Cowen analyst John Kernan in a mid-September note estimated that Yeezy represents 7% to 12% of Adidas’ footwear, or roughly 4% to 8% of the company’s total revenues. In his note, Kernan said that the “halo effects of recognition and digital traffic that Yeezy has afforded the Adidas brand could be at risk.”

If Adidas were to look for something to offset the loss of Yeezy in the short term, Swartz believes the task could prove difficult.

“That’s going to create a hole in North America,” Swartz said. “But I don’t think the impact will be immediate, which will give Adidas some time to try to make up for it with other stuff. This is a company that has a lot of different product lines and categories. They could release other products that are more in the casual space. It would not fully offset the loss from Yeezy, but it could offset it partly.”

The Three Stripes could also lose a partner with a dedicated fanbase unlike any other celebrity today.

“The loyalty of Yeezy buyers is incredible because if Travis [Scott] leaves Jordan Brand today, people will still buy Jordans,” sneaker YouTuber David “Kari” Daniels explained. “If Kanye leaves Adidas, I think the company knows they’ll be selling Yeezy retros for quite some time to offset that loss.”

He continued, “A lot of Yeezy buyers have separated the person from the product as well. The [people who are loud] about his rants online don’t have a closet of 350s — or any for that matter. “

Aside from West, Adidas has a stacked roster of megastar ambassadors who wear the Three Stripes, a group that includes music icons Beyoncé, Bad Bunny and Pharrell Williams.

But market watchers don’t believe those partnerships are as fruitful for Adidas as Yeezy.

“Ivy Park, the one with Beyoncé, seems to be moving kind of slow, which is surprising. She’s a bigger star than Kanye, but just because somebody is a big star does not mean they can sell shoes. And they’ve had Pharrell stuff now for years, but I don’t hear that much about it, so I think it’s really a niche product,” Swartz said.

In terms of influence, Daniels said the impact Adidas’ other superstars has on consumers pales in comparison to that of West.

The last Adidas product that was a hit with sneaker diehards, Daniels said, is Bad Bunny’s take on the classic Forum shoe, which debuted in March 2021. Before that collaboration, the NMD silhouette resonated with collectors in 2019.

Since then, many of Adidas’ strongest sellers have been connected in some way to Yeezy.

“Even the Adilette Slide [that was revealed in June] and FomQ [first seen in August] both have the residue of Yeezy helping boost sales,” Daniels said.

Looking ahead, industry insiders need other questions answered to properly asses the impact a potential split would have on Adidas. “I think it’s important to consider whether Adidas has the rights to continue to sell Yeezy after the contract,” Goldstein said, questioning whether or not Adidas owns the intellectual property and could keep selling the sneakers minus Yeezy branding.

Regardless, Swartz believes the athletic powerhouse will be feeling the impact of the split for years to come.

“Yeezy was no doubt in their long-term financial modeling at least through 2026 because they probably didn’t expect [the partnership] to end early, as it appears it will. It will have an impact for a while unless they can get something that’s similarly popular. They will have to put together some contingency plans,” Swartz said.

—With contributions from Shoshy Ciment 

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