Adidas sold €350 million ($373 million) worth of Yeezy branded apparel in the third quarter as it continued to offload the €1.2 billion worth of stock it was left with following the end of its partnership with Kanye West after the rapper made a series of antisemitic comments.
The shoemaker’s decision to cut ties with West, who is now known as Ye, saw Adidas’ share price plummet, as investors worried the German firm would be unable to sell inventory leftover from the lucrative tie-in.
But in May, Adidas said it would continue selling Yeezy merchandise, instead of burning or otherwise repurposing the remaining inventory, and donate an unspecified portion of its profits to charity, including the Anti-Defamation League.
Now, Adidas
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has said sales of leftover Yeezy stock generated profits of €150 million in the third quarter, on top of the €150 million it made from selling Yeezy products in the second quarter.
Shares in Adidas fell 2% following the news on Wednesday, with stock in the Frankfurt-listed company having risen 36% over the previous 12 months after plunging to long-time lows following the decision to cancel its partnership with Kanye West last October.
Adidas’s results saw it post operating profits of €409 million, down 27.5% year-on-year, as its bottom line was hit by €110 million worth of extraordinary expenses related to the launch of a strategic review and charity donations in the wake of the cancellation of the Yeezy collaboration.
The Bavarian sportswear company also saw its revenues drop 6% to €5.99 billion, as lower sales from its Yeezy line and a 10% drop in sales from its North American segment weighed on the top line
Adidas noted its North American sales were impacted by high levels of inventory in the region, as company CEO Bjørn Gulden, who took up his new position in January this year, said he expects high inventories will continue to impact the business “for a while.”
The company noted it had made better-than-expected progress in cutting its inventory levels by 23% compared to last year, as it said it now has €4.8 billion worth of unsold stock including the Yeezy products.
Adidas’ currency-neutral revenues, meanwhile, increased 1% year on year, due to higher sales across all regions outside of North America, with particularly strong growth in Latin America (+13%), Greater China (+6%), and the Asia Pacific(+7%).
Excluding Yeezy, Adidas’ currency-neutral sales rose 2% year-on-year as an uptick in footwear sales offset lower apparel and accessories sales.
RBC analysts, led by Piral Dadhania, said they remain confident in Adidas’ abilities, under new CEO Gulden, to turnaround the business in the face of an increasingly competitive market, as they said they “view adidas’ brand equity as amongst the strongest in the sector.”
This story originally appeared on Marketwatch
