Dive Brief:
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Adidas Tuesday terminated its partnership with Ye “immediately” in light of problematic comments from the fashion designer and hip hop star, also known as Kanye West. The sneaker giant will “end production of Yeezy branded products and stop all payments to Ye and his companies. Adidas will stop the Adidas Yeezy business with immediate effect.”
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“Adidas does not tolerate antisemitism and any other sort of hate speech,” the company also said in a statement. “Ye’s recent comments and actions have been unacceptable, hateful and dangerous, and they violate the company’s values of diversity and inclusion, mutual respect and fairness.”
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The company expects the move to have a short-term negative impact of up to €250 million ($246.5 million at press time) on the company’s net income this year, per its press release. All told, Cowen & Co. analysts estimate the Yeezy sub-brand brings Adidas about 4% to 8% of its total revenue or 7% to 12% of its footwear sales.
Dive Insight:
As Ye ramped what even many of his fans and friends saw as problematic behavior and statements, Adidas earlier this month would only say that its Yeezy collaboration was under review, perhaps dragging its feet given the outsized impact of the Yeezy line on its sales. But in the end it had too much to lose by sticking with it, analysts say.
“The decision to stop the production of Yeezy will cost Adidas around $246 million this year,” GlobalData Managiing Director Neil Saunders said in emailed comments. “However, while the line has been popular, sales would likely have taken a hit anyway as groups of consumers shunned Yeezy because of its association with Ye.”
The fashion designer has long been provocative, in his lyrics and public statements, and struggled with corporate culture as early as his brief tie-up with Nike more than a decade ago. Most recently, though, his remarks have tilted toward hate. He offended many with a “White Lives Matter” T-shirt during his Paris fashion show, only to double down on his embrace of a political stance favored by White supremacists.
Earlier this month the Anti-Defamation League called out other interviews in which he “made a series of offensive and conspiratorial claims about Jewish people and Jewish identity.” The group days later updated its criticism, saying, Ye “continues to amplify antisemitic tropes and conspiracy theories,” and warned that his “comments have been embraced by antisemitic extremist groups.”
Indeed over the weekend White supremacist groups reportedly unfurled a banner reading in part “Kanye is right about the Jews” and distributed antisemitic flyers in Beverly Hills. On Monday it was reported his agents at CAA dropped him and a documentary about his life has been shelved, according to Variety.
Adidas’ own Nazi history likely haunted its decision, according to Kristin Bentz, president of KB Advisory Group. Its statement Tuesday suggests that they aren’t letting Ye go because of any legal dispute. “It wasn't necessarily he violated his contract, but that [his actions] violated their inclusivity, which I thought was interesting,” she said by phone. “It's how the company does business.”
It’s how every company should do business, according to Thomai Serdari, professor of luxury marketing and branding at New York University’s Stern School of Business.
“Adidas has the most to lose in terms of inventory and associated costs but also the most to gain in recapturing customer trust,” she said by email. “They should have spoken up earlier, but taking a stance is exactly what all companies should do — racist and antisemitic artists are primarily anti-humanists and as such they don’t deserve the title of ‘artist’ nor any type of lucrative contracts.”
