What was changed
adidas ended its Yeezy partnership with Kanye West, stranding roughly 1.2 billion euros of unsold Yeezy product. In 2023 the company guided to an operating loss of around 100 million euros, assuming it would need a major write-off of that inventory.
New CEO Bjørn Gulden made a different call. Rather than write off most of the inventory, adidas decided the remaining product could be sold — at least at cost — based on consumer, retail and trade research showing it would move at that price.
The company ran a few controlled 'drops' of the remaining Yeezy product, generating around 300 million euros of profit contribution while keeping the brand image from spinning out of control.
The result was an operating profit of 268 million euros for 2023, versus the guided 100 million euro loss — an improvement of 368 million euros. Sales were 21.4 billion euros, and excluding Yeezy the underlying business grew 2% currency-neutral.
What it achieved
adidas swung from a guided 2023 operating loss of 100m euros to an operating profit of 268m euros, beating guidance by 368m euros.
Why it worked
Selling stranded inventory at cost recovered value instead of treating it as a write-off.
Controlled drops avoided a fire-sale that would have damaged the brand.
The operational business beat expectations in Q4, adding to the gain.
Reinvesting in the core brand while handling Yeezy carefully set up 2024.
What can be applied
When a brand partnership collapses, the question is what to do with stranded inventory — selling it at cost can recover hundreds of millions instead of writing it off.
Aftermath
adidas guided to around 500 million euros of operating profit for 2024, assuming it would sell the remaining Yeezy inventory at cost with no profit contribution. The episode marked the transition from the Yeezy-era volatility to a rebuilding of adidas' own footwear and apparel franchise under Gulden.
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