Adidas left in turmoil with £1.1BILLION of unsold stock from Yeezy range after Kanye West tie-up

Adidas could be facing its first annual loss in 30 years after a failed link with the rapper formerly known as Kanye West left them with £1.1bn of unsold shares.

The German sportswear brand reported its annual financial results on Wednesday, saying it will cut dividends to shareholders as they consider how to deal with the controversial rapper’s unsold ‘Yeezy’ products.

If they decide to cancel the products, it could result in a £446m reduction in the company’s operating profits and a first annual loss for the first time in three decades.

According to the Washington Postthey could literally ‘burn £500m’ off the Yeezy range that was once a hugely popular and highly lucrative part of the sportswear business model.

However, Adidas chief executive Bjorn Gulden hopes the company can return to profitable growth by 2024 by cutting inventories and cutting discounts.

A link to the rapper once known as Kanye West has left them £1.1bn in unsold shares.

In a statement, Gulden added that he seeks to put the “Yeezy” fiasco behind him and build the brand with a strategy that balances global direction with local needs, that is fast and agile.

The company’s decision to drop West capped the rapper’s fall from grace after a pattern of increasingly erratic behavior and anti-Semitic outbursts.

In October, he said in a social media post that he would do “death scams against the Jewish people,” and later doubled down on media interviews with comments that included vile remarks about the Jewish people.

Burning or destroying the shoes would be the most extreme option, but it’s something other fashion brands have done before, albeit under different circumstances. Luxury brands such as Louis Vuitton and Burberry have previously faced criticism for burning unsold shares to preserve brand value.

Adidas’s decision to end its lucrative deal with West prompted a rapid end to sales of his line of footwear and clothing.

Adidas, which owns the rights to most of the Yeezy line, said after the partnership ended in October 2022 that it was ending production of “Yeezy-branded products and [stopping] all payments to [West] and their companies’.

In November, the company suggested that it would continue with the designs, but without the Yeezy name and branding. The announcement sparked speculation that the rapper might still be online for some payments.

Following the decision to cut ties with West in October, owners of his Yeezy shoes scrambled to ditch their shoes, with searches for the term “selling Yeezy” skyrocketing nearly 600 percent overnight.

Adidas has a number of high-profile deals elsewhere, including a previously world-record tie-up with Manchester United.

The sports brand has a world record £75m a year deal with Manchester United.

The sportswear brand also has an £18m boot deal with PSG star Lionel Messi.

The Adidas brand was seen globally when Argentina won the World Cup in Qatar last year.

Premier League leaders Arsenal also have their equipment supplied by the German company.

The German supplier agreed a £750m, 10-year contract with the Old Trafford outfit, a world record deal in 2015.

In addition, they also have a ‘lifetime contract’ with Lionel Messi worth £18 million a year with the Paris Saint-Germain hitman in 2017.

Success on the pitch seems not to have helped results much despite being the team supplier to Argentina, who won the World Cup in Qatar in 2022.

As well as United, adidas also supply Arsenal with sportswear and the north London outfit is in a strong position to win the Premier League title this season.