Adidas, one of the world's largest sports brands, is currently facing a predicament with its unsold inventory of Yeezy sneakers consisting of Yeezy 350s, 700s and much more! This issue arose following the decision in October 2022 to sever ties with Kanye West, the famous rapper and designer, due to his making anti-Semitic comments and other controversial behaviour.
In November of the same year, it was initially reported that Adidas planned to use its Yeezy inventory in 2023. However, the newly appointed CEO Bjørn Gulden stated during an earnings call that no final decision has yet been made due to the situation’s complexity. Gulden shared his thoughts on this matter, "If you can't sell and you can't destroy, what's your option? That's why we haven't made a decision on it, because it's a very complicated issue."
Since Gulden took the helm, the company has received hundreds of business proposals on what to do with the remaining Yeezy stock. Suggestions range from donating them to countries where people are in need or to help in areas affected by natural disasters. However, Gulden acknowledged that some of these proposals are not straightforward solutions due to the high value of the merchandise. "The people that are saying send the shoes to Turkey or somewhere where people don't have shoes or there has been a tragedy happening, I think you agree that these are not normal shoes," Gulden said. "The value of the product is not the physical value of the ingredients. It's a brand and merchandise that is sold at a high price."
In addition to the ethical dilemma of what to do with unsold inventory, there is also a financial impact to consider. The Yeezy brand was a significant contributor to Adidas' revenue and profit margin, with some estimates suggesting that it accounted for up to 20% of the company's total sales. Losing this revenue stream could be detrimental to the company's bottom line.
Adidas is not alone in facing the challenge of handling unsold inventory. Many other companies in the fashion industry are grappling with this issue, with some resorting to burning or landfilling unsold merchandise. However, with Adidas having such a big stance on sustainability this really isn’t an option for them.
In conclusion, the issue of what to do with unsold inventory is a complex problem that Adidas is currently grappling with. Finding a financially and ethically sound solution is no easy task, but it is one that the company must address in the near future.
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