adidas reported in its Q2 earnings call on Thursday that the recent Yeezy Day sale event accounted for a staggering 85% of the company's operating profit in the second quarter of 2023.
Following adidas severing ties with Ye, formerly known as Kanye West, in October 2022 over his anti-Semitic comments and behavior, The Three Stripes was left at a crossroads with what to do with the remaining $1.3 billion worth of Yeezy sneakers. After deciding against destroying the inventory or writing it off, they chose to release the remaining Yeezy sneakers in batches, the first of which occurred at the end of May and the beginning of June 2023.
According to adidas executives on the earnings call, the first Yeezy Day sale offloaded roughly 20-25% of the leftover Yeezy sneakers. This contributed 150 million euros to adidas' 176 million euros in operating earnings for the quarter. Thus, ~ 85% of adidas' Q2 earnings originated from the event. However, Ohlmeyer warned that the contribution from Yeezy might seem more significant than it was, as many of the company's expenses weren't accounted for in the number.
Despite Ye’s controversial standing, there's no denying that his collaboration with adidas through the Yeezy brand had brought significant financial success. It was previously reported that up to 40% of adidas' profit was attributed to Yeezy sneaker sales.
The initial Yeezy Day proved to be a tremendous monetary success for adidas, as they amassed a revenue of $437 million USD solely from Yeezy sneaker sales. Despite this significant intake, consumer demand far exceeded the supply. A total of $565 million USD worth of Yeezy product orders were placed. Unfortunately, adidas had to cancel many of these orders due to their inability to meet the overwhelming demand, signaling consumer interest in the Yeezy line is still strong.
The company announced that a "significant share" of the profits would be donated to various organizations, including the Anti-Defamation League, the Philonise & Keeta Floyd Institute for Social Change, and Robert Kraft’s Foundation to Combat Antisemitism. adidas' CFO, Harm Ohlmeyer, stated 10 million euros had been given out so far and that adidas would be donating an additional 100 million euros.
All of this comes as adidas kicks off its next batch of Yeezy releases in August, offering products at select retailers for the first time since the partnership ended. It will be interesting to see if demand stays the same as more products flood the market. Keep it locked to our Twitter and the Sole Retriever mobile app to stay updated on the latest news regarding adidas Yeezy and more in the sneaker and streetwear world.
Sneakerhead from South Florida who turned his passion into a career. Concerts, music, trying new restaurants, and catching the latest movies are some of the things I enjoy when not writing for Sole Retriever. Email: nick@soleretriever.com
