Adidas settles Yeeze dispute with Kanye West

After two years Adidas it Streit about a separation with dem US-Scandal-Rapper Kanye West (“Ye”) attached. “We don’t owe him anything anymore, and he doesn’t owe us anything anymore,” said the CEO Björn Gulden on Tuesday in Herzogenaurach.

No money was paid as a result of the settlement. There was an out-of-court settlement with West and his lawyers. “We’re drawing a line under the matter. Whatever happened is history.” This means that all complaints are off the table, says Gulden.

The Franconian sporting goods manufacturer had two years ago – still under Gulden’s predecessor Kasper Rorsted – separated from Ye after he repeatedly made headlines with racist and anti-Semitic comments. Adidas and West have since been involved in a number of legal disputes. Ye had designed a successful shoe line for Adidas for years under the name “Yeezy”.

Part of the sales proceeds will be donated

Gulden had decided to throw the remaining stock of “Yeezy” shoes that had already been produced onto the market so as not to have to destroy them. Part of the proceeds were donated.

The inventory of “Yeezy” shoes has now shrunk – at purchase prices – from 500 million to 50 million euros, said the CFO Harm Ohlmeyer. The remainder is expected to be sold this year to cover costs. In the context of the agreement, Adidas released provisions of 100 million euros and donated the amount to the Adidas Foundation. In total, the group made donations of almost 250 million euros from the “Yeezy” proceeds.

Strong third quarter

The turbulence surrounding West, among other factors, had a significant impact on Adidas’ past financial year. In the current year, however, the sporting goods manufacturer has gotten back on track. After a strong third quarter, the group was optimistic about further developments. Gulden considers the business to be well balanced with double-digit growth rates in both the lifestyle and sports categories. “The strong underlying growth in China and the earlier-than-expected return to positive results for the Adidas brand in North America in the last two quarters make us confident about the medium-term future,” he said.

Adidas had already presented preliminary figures on October 15th and increased its forecast once again. The company has now confirmed this. Sales in the third quarter rose by 7.3 percent to 6.4 billion euros, with currency-adjusted revenues increasing by 10 percent. Among other things, Adidas benefited from robust demand for retro sneakers and football jerseys. The numbers are still skewed by Yeezy sales from the Kanye West collaboration. Excluding these sales, sales increased by 14 percent after adjusting for currency effects.

The growth was driven by Europeans’ enthusiasm for purchasing. But Adidas was also able to grow by almost nine percent after adjusting for currency effects in the important Chinese market. Consolidated profit from continuing operations increased by 73.4 percent to EUR 469 million.