One of the footwear industry’s most successful partnerships came to an abrupt end on October 25th, 2022 after months of taunting and hateful rhetoric from Ye (FKA Kanye West) forced his partners at adidas to cut ties with the now-former billionaire. As their partnership progressed from ultra-limited releases in 2015 to generating nearly $2 billion in revenue in the 2020s, so too did adidas’ profits as reports indicated that upwards of 40% of their yearly profits came directly from Yeezy sneakers. While this loss took a major toll on Ye himself, adidas is expected to lose roughly $250 million in profits just in Q4 2022. Going forward, new CEO (come January 1st, 2023) Bjørn Gulden will have to face not only a huge profit maker in Yeezy but falling sales overseas and inventory buildup that has affected every brand in the footwear industry. One part of the solution to these problems, selling the remaining Yeezy inventory without Yeezy branding.
Will Yeezy Sneakers Release In The Future?
During a conference call in the early morning hours of November 9th, adidas relayed their plans to investors (in regards to the Yeezy partnership) and gave a financial breakdown on the sale of Yeezy sneaker designs without having to fork over the 15% royalty rate to Ye, stating they expect to keep around $300 million thanks to severing ties with the controversial figure. Although they didn’t explicitly lay out plans for selling the products without branding, the majority of Yeezy sneakers came with very minimal branding outside of adidas itself as the packaging and insole were the only places you’d find references to “Yeezy” (except for the Yeezy Boost 700 V1 which has a small “Yeezy” logo on the internal lining of the medial side), so expect to see the same exact designs give for the packaging and insole.
Come 2023, we should begin to see the new and existing inventory of Yeezy sneakers hit the marketplace. Once again reiterating their ownership of Yeezy designs, adidas' CFO Harm Ohlmeyer was quoted as saying “I can confirm that adidas is the sole owner of all design rights registered to existing product, as well as previous and new colorways under the partnership, and we intend to make use of these rights as early as 2023.
The Yeezy Business Outside Of adidas
While The Three Stripes own the majority of the footwear designs, Ye himself is listed as the inventor of the Yeezy Slide design under his company Mascotte Holding Inc., meaning one of adidas' most popular and profitable silhouettes under the partnership will remain with Ye in his future footwear endeavors. In an interview with reporters outside of his daughter North West’s basketball game four days after adidas announced the partnership had ended, Ye stated he had a meeting with adidas earlier in the day, though what was discussed exactly was never revealed.
Prior to the split between adidas and Yeezy, Ye had reportedly purchased multiple manufacturing facilities in California with the intention of going solo in the fashion world, though it was also reported he showed up to Skechers headquarters and was escorted out of the building by executives. What could Yeezy do going forward on its own? According to reputable Yeezy insider John Alexander, the Yeezy brand is expected to continue on its own and utilize a pre-order system for future releases that will likely include products like the YZY SHDZ or footwear showcased during the Yeezy Season 9 fashion show.
Overall, adidas isn’t a dying business because of the partnership with Yeezy ending even if it played a pivotal role in its success over the last decade. They still have plenty of collaborators and in-house designers that will push the brand forward, though their place in the “hype” world will definitely take a hit. We’ll have to see how consumers react to future Yeezy releases that come solely branded as adidas sneakers, though online discourse suggests many aren’t open to this idea. While this rhetoric fills up comment sections online, the demand for sneakers like the Yeezy 350 is still there for the general consumer who doesn’t consider themselves “sneakerheads.” Keep it locked to our Twitter and the Sole Retriever mobile app to stay updated on the latest in this adidas x Yeezy split and more in the sneaker and streetwear world.
Recap
- adidas is, according to CFO Harm Ohlmeyer, “the sole owner of all design rights registered to existing [Yeezy] product” and “intend[s] to make use of these rights as early as 2023,” meaning we can expect adidas-branded Yeezy sneaker designs in the next year
- adidas is expected to retain around $300 million in 2023 thanks to no longer paying Ye his 15% royalty rate
- Ye’s future plans are still in question as he reportedly owns multiple manufacturing facilities and is expected to attempt to open his own retail shopping locations
