Adidas Terminates Yeezy Partnership With Ye With Immediate Effect

Joelle Diderich
·8 min read
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PARIS — Faced with growing public pressure and calls for a consumer boycott, Adidas said on Tuesday it was terminating its Yeezy business with rapper Ye with immediate effect, a decision that will cost it up to 250 million euros in net profit this year.

“Adidas does not tolerate antisemitism and any other sort of hate speech. Ye’s recent comments and actions have been unacceptable, hateful and dangerous, and they violate the company’s values of diversity and inclusion, mutual respect and fairness,” Adidas said in a statement.

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“After a thorough review, the company has taken the decision to terminate the partnership with Ye immediately, end production of Yeezy branded products and stop all payments to Ye and his companies. Adidas will stop the Adidas Yeezy business with immediate effect,” it added.

The German sporting goods firm was the latest company to sever ties with the rapper formerly known as Kanye West, who has alienated his former partners with a slew of hateful comments in recent weeks, culminating with widely condemned antisemitic threats.

The decision to scrap the Adidas Yeezy brand after a highly successful seven-year run was welcomed by the Anti-Defamation League, while analysts said it illustrated the dangers to companies’ reputation and bottom line of joining forces with controversial celebrities.

Gap followed suit by announcing it was pulling remaining Yeezy Gap product from its stores and online following the end of its partnership with Ye in September.

Adidas said on Oct. 6 its partnership with the Yeezy brand was “under review” after Ye staged a surprise YZY show in Paris that featured T-shirts with the slogan “White Lives Matter” and opened with a monologue in which he prided himself as being “unmanageable.”

According to the Anti-Defamation League, “White Lives Matter” is a white supremacist phrase that originated in early 2015 as a racist response to the Black Lives Matter movement.

Ye added fuel to the fire by telling the podcast Drink Champs last week: “I can say antisemitic things, and Adidas can’t drop me. Now what? Now what?” In recent days, public figures including actor David Schwimmer and Ari Emanuel, chief executive officer of entertainment and media company Endeavor, called for Adidas to make a clean break.

“Apple and Spotify, which host West’s music, whoever organizes West’s tours, and Adidas, which collaborates with West on his fashion line, should all stop working with him,” Emanuel wrote in an oped in the Financial Times on Oct. 19. “Those who continue to do business with West are giving his misguided hate an audience.”

Kim Kardashian, who remains entangled in ongoing divorce proceedings with Ye, appeared to join in the chorus of condemnation when she wrote on Twitter on Monday: “Hate speech is never OK or excusable. I stand together with the Jewish community and call on the terrible violence and hateful rhetoric toward them to come to an immediate end.”

Meanwhile, more than 270,000 people signed a Change.org petition calling for an end to the Adidas Yeezy partnership. Just three days after releasing the popular Yeezy Boost 350 V2 sneaker in a new colorway, Adidas officially ended the deal and detailed its legal and financial ramifications.

“This is expected to have a short-term negative impact of up to 250 million euros on the company’s net income in 2022 given the high seasonality of the fourth quarter,” it said.

“Adidas is the sole owner of all design rights to existing products as well as previous and new colorways under the partnership,” Adidas continued, noting that more information will be given as part of the company’s upcoming third-quarter earnings announcement on Nov. 9.

Piral Dadhania, analyst at RBC Capital Markets, estimated that the Adidas Yeezy brand generated revenues of 1.7 billion euros to 1.8 billion euros in 2021. It calculated that this implied revenues of around 600 million euros for the last three months of 2022, of which 500 million revenues will now be lost.

Based on the net income impact that Adidas has flagged, RBC extrapolated annualized Yeezy net income of around 700 million euros to 750 million euros, equivalent to almost 50 percent of the German group’s net profit in 2021.

Adidas plans to sell existing Yeezy product designs using Adidas branding from the first quarter of 2023, in a bid to limit the loss of revenues, RBC reported, citing company sources. It will also save on expenses related to royalty and marketing fees no longer payable in 2023, it said.

The news comes at a time of uncertainty for the sporting goods maker, which announced in August the surprise departure of CEO Kasper Rorsted next year. Only last week, it lowered its guidance for the second time this year, citing factors including pandemic-related lockdowns and a consumer boycott of Western brands in China.

“We would expect to see further revenue, margin and earnings consensus downgrades following this latest instalment of bad news at Adidas. We are doubtful whether Adidas will be able to fully compensate for loss of Yeezy profits in 2023, which is likely to weigh on sentiment further in our view,” Dadhania said in a research note on Tuesday.

Neil Saunders, managing director of London-based data analytics and consulting company GlobalData, said Adidas had “yielded to the inevitable” by cutting ties with Ye, noting that it was likely that sales would have taken a hit anyway due to the boycott calls.

“Given the baseness of Ye’s recent comments, and the fact his words are now stirring up antisemitism among others, Adidas had no choice but to act in order to protect its reputation and show customers it is on the right side of morality,” Saunders said.

“The saga of Ye, not just with Adidas but with brands like Gap and Balenciaga, underlines the importance of vetting celebrities thoroughly and avoiding those who are overly controversial or unstable. Although there is room for some tension in fashion, this must never cross the line of decency and basic respect for humanity,” he continued.

“Companies or brands that fail to heed this will get stung, especially if they become overly reliant on a difficult personality to drive their business,” Saunders added.

Jonathan Greenblatt, CEO of the Anti-Defamation League, praised Adidas for taking action, crediting the decision as a result of its #RunAwayFromHate campaign.

“This is a very positive outcome. It illustrates that antisemitism is unacceptable and creates consequences. Without a doubt, Adidas has done the right thing by cutting ties with Ye after his vicious antisemitic rants,” he said in a statement. “In the end, Adidas’ action sends a powerful message that antisemitism and bigotry have no place in society.”

“I’m glad Adidas did the right thing,” Karlie Kloss said during her onstage conversation at the WWD Apparel and Retail CEO Summit in New York City, when asked for her reaction to the news.

Adidas’ decision follows an announcement on Friday that Balenciaga would no longer work with Ye. “Balenciaga has no longer any relationship nor any plans for future projects related to this artist,” parent company Kering said in a response to a query from WWD.

Earlier this month, the “Stronger” rapper opened the French fashion brand’s summer 2023 show, held in a mud pit during Paris Fashion Week, wearing what looked like battle gear, including a branded mouthguard shielding his teeth. The image has been removed from Balenciaga’s website.

It was his latest collaboration with Balenciaga artistic director Demna, following the launch earlier this year of their Yeezy Gap Engineered by Balenciaga line, which dropped in February in tandem with Ye’s “Donda 2” experience performance in Miami, Florida. Demna served as creative director for an earlier listening event for the album last year.

The designer also has a strong relationship with Kardashian, who appears in advertising campaigns for Balenciaga, and her extended family. Sisters Kylie Jenner and Khloé Kardashian attended the Balenciaga show on Oct. 2.

Ye, who was diagnosed in 2016 with bipolar disorder, has appeared to spiral out of control in recent weeks. Last month, he terminated his partnership with Gap Inc. amid a flood of recriminations.

Faced with violent public backlash over his show in Paris, the rapper publicly attacked everyone from fashion editors to former friends and luxury mogul Bernard Arnault. After he was suspended from Instagram and Twitter for violating the platforms’ policies on hate speech, Ye said he had agreed to buy right-wing social media platform Parler.

“In September, Gap announced ending its Yeezy Gap partnership. Our former partner’s recent remarks and behavior further underscore why. We are taking immediate steps to remove Yeezy Gap product from our stores and we have shut down Yeezygap.com,” Gap said in a statement on Tuesday.

“Antisemitism, racism and hate in any form are inexcusable and not tolerated in accordance with our values. On behalf of our customers, employees and shareholders, we are partnering with organizations that combat hate and discrimination,” it added.

Talent agency CAA told the Hollywood Reporter on Monday that it stopped representing the artist within the last month. Meanwhile, film and television studio MRC said it was shelving a completed documentary focused on Ye.

— With contributions from Miles Socha

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