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Adidas-Kanye West billion dollar fallout vs Beyonce’s weak sales

Given Beyoncé’s weak Ivy Park 2022 sales, down by over 50% from a previous performance and Adidas overall shares tank, the second giant in the global sportswear market may be left - though unlikely - with no choice but to make amends with the Yeezy entrepreneur, Kanye 'Ye' West, following their costly $1 billion dollar-plus fallout.

After pulling the plug on the Yeezy partnership following rapper, Kanye West’s anti-semitic comments October last year, it looks as if Adidas may have to reconsider its decision as the fallout continues to result in devastating revenue loss for the athletic brand, which reported 11% fall in shares on Friday.

Coupled with the underperformance of Beyoncé’s Ivy Park line, which has reportedly fallen by over 50%, Adidas maybe left with no other choice but to make serious amends with the Yeezy entrepreneur, now known formally as Ye, although this may unlikely be the case.

Last week, the athletic brand presented its preliminary financial results for 2022, which showed a heavy decline in net income at 254 million euros ($272 million), which is nearly 83 percent drop from 1.49 billion euros in 2021. So serious is the fallout that it’s also believed to have affected Beyoncé’s Ivy Park line, which is said to have fallen by over 50%.

Adidas new CEO, Bjørn Gulden predicted they could lose around R23 billion ($1.3 billion) of piles of unsold stock if nothing changes, resulting in a 700 million euro operating loss this year.

“The numbers speak for themselves. We are currently not performing the way we should,” Gulden, who filled the position January this year as part of the brand’s efforts to turn the company around, said in a statement.

“Adidas has all the ingredients to be successful… We need to put the pieces back together again, but I am convinced that over time we will make Adidas shine again … but we need some time.”

While Ye would often be seen wearing the Yeezy sneakers in many of his public appearances, that wasn’t the case with Beyoncé.

To offset this predicted loss, the company may need to sell or repurpose Yeezy designs to customers without the brand name as opposed to writing off completely. While the former was its initial plan, Adidas is said to be conducting a strategic review, which could cost as much as €200 million in 2023. This loss would be the first of its kind in three decades.

On average, Adidas expected a 4% rise in 2023 revenue with operating profit of nearly $1.1 billion, according to figures cited on its website. But this was not to be, as Ye had his nine-year partnership with Adidas terminated in October 2022, along with a series of other sponsors after he made a series anti-semitic remarks, in unfortunate move that significantly reduced his networth from an estimated $2 billion to $400 million, according to Forbes.

Adidas; new era looms amid Beyoncé vs Ye woes

While Beyoncé maybe one of the biggest entertainers in the world, and to this date the most decorated Grammy winner, the underwhelming performance of her 2022 Adidas Ivy Park line is prove that it doesn’t mean every single of her ventures would be successful as the result.

Despite significantly falling short of its projected 2022 sales goal, Adidas insists its partnership with Ivy Park is “strong and successful”.

The less than impressive Ivy Park sales, which largely points to Adidas failed relationship with Ye, reportedly pulled about $40 million last year, a significant drop of more than 50 percent from the $93 million it made in 2021. This is way far less that the $250 million it had predicted, according to a recent Wall Street Journal report.

The news comes just months ahead of the end of their three-year contract at the end of 2023, with Adidas yet to decide whether it’s ending or revising the deal.

Although Beyoncé is undeniably a bigger star than Ye, critics suggest the line struggled due to weak promotion from star herself. They argue that while Ye would often be seen wearing the Yeezy apparel in many of his public appearances, that wasn’t the case with the Black Parade singer, making her seem not as committed, or seeing eye to eye with Adidas.

However, the powers that be at Adidas has refuted this, saying its partnership with Ivy Park is “strong and successful”, and that “they’re proud of the work they’ve created together.”

While the future of Ivy Park with Adidas is uncertain, and worse still its once powerful partnership Yeezy on the verge of becoming yesteryear news, the German brand has just dropped in South Africa, a new sub-line aimed at Gen Z called, Sportswear.

While the future of Ivy Park and Yeezy hang in the balance, Adidas has just dropped in South Africa, a new sub-line aimed at Gen Z called, Sportswear – with actress and style icon Jenna Ortega as its face.

Hot on the heels of recent successful local collaborations with Rich Mnisi and Thebe Magugu, this is essentially its first full collection launch in five decades – with actress and style icon Jenna Ortega coming on board as the face of the new label and its ‘All That You Are’ campaign.

Tankiso Komane
Tankiso Komane
A Tshwane University of Technology journalism graduate, Tankiso Komane has a vast experience in print & broadcast media business and has worked for some of the country’s biggest daily newspapers, including The Sowetan, The Citizen, The Times, and The New Age. Through her varied work as a journalist, notably as a copywriter for SABC1 (On-Air promotions) and as a publicist for Onyx Communications, she has developed an in-depth understanding of the nature of the media business and how to use it for the purpose of exposure. Her expertise in journalism across various disciplines, coupled with a good reputation, has laid the foundation of a new kind "trust in Journalism" as the media ecosystem continues to digitally evolve.
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