It's been a fascinating year for Adidas.
Less than a year ago the iconic German shoe and athletic-wear company disbanded its partnership with Kanye West, then ushered in a new chief executive — and with him a new era.
Adidas (ADDYY) -) stock has been on something of a tear since Bjørn Gulden took the helm in January. It's up 32% in the past year and has seen a resurgence in some of its most popular originals, particularly among the coveted cohort of younger people and trendsetters.
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The road hasn't been smooth. In October 2022 rapper West — the face of Adidas's highly successful Yeezy brand — made a slew of antisemitic remarks on social media. The company ultimately ended the partnership, which had accounted for roughly 10% of Adidas's annual revenue. And the company was suddenly stuck with more than $1 billion of unsold inventory plus a PR nightmare.
But Adidas put the Yeezy nightmare behind it and began to rebound. Gulden said in at a shareholder meeting that the company would "sell parts of this inventory and donate money to the organizations that are helping us and that were also hurt by Kanye’s statements."
And from there the company pivoted to its core audience and items: sportswear and street fashion. It worked.
"And I think that the way we have done collabs, you see it here together with Bad Bunny and you also see the Samba that we did with Ronnie Fieg, is causing a lot of energy," Gulden said on the Q1-earnings call. "And as you can see outside the Kith store in Tokyo, people are lining up in hundreds to actually buy this product."
Adidas CEO's surprising remarks about Kanye West
And while the rest of the world has seemingly moved on from the blunder that was the Kanye collaboration, Gulden seems to be thinking about it still.
"This is before my time," he told the "In Good Company" podcast. "I think Kanye West is one of the most creative people in the world. And both with music and what I would call street culture."
Gulden also called the Yeezy line "very successful." It brought in $2 billion a year of revenue for the company.
"And then as creative people," Gulden continued, "he did some statements that weren't so good, and that caused [Adidas] to break that contract and withdraw the product. Very unfortunate because I don’t think he meant what he said and I don’t think he’s a bad person. It just came across that way."
Gulden, who formerly was CEO of Puma, pivoted to focus on the business angle of things.
"And that meant we lost that business," he continued. "One of the most successful collabs in the history. Very sad. But again, when you work with third parties, that might happen. ... It's part of the business."
Adidas said it would lose some $1.3 billion in revenue in 2023 from abandoning the partnership.
Kanye, for his part, said that his losing the riches from the divestiture "humbled" him.
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