Adidas could be forced to burn as much as $500 million worth of Yeezy sneakers after hastily cutting ties with rapper Kanye West last year over anti-Semitic remarks.
The German sportswear giant is left with few good options for its Yeezy brand – a once-popular and lucrative segment of its business that was irrevocably tainted during West’s high-profile meltdown.
If Adidas is unable to find buyers for the sneakers, one possible path to resolving the dilemma would be “literally burning the shoes,” the Washington Post reported, citing industry experts. Adidas’ remaining Yeezy inventory is estimated to be worth between $300 million and $500 million.
Adidas wouldn’t be the first company to torch its product. Several retailers, including Burberry, Coach, Victoria’s Secret, Louis Vuitton and Nike, have opted to destroy inventory that went unsold as a means of clearing surplus supply.
Experts warned the practice, while relatively commonplace, would be the “worst outcome” because it wouldn’t generate revenue and could spark backlash over waste and environmental costs.
Adidas could opt to rebrand its Yeezy sneakers and attempt to sell them at a discount, analysts told the Washington Post. Prior to West’s anti-Semitic tirades, the sneakers could sell for roughly $600 a pop.
Any effort to resell “zombie Yeezys” under a new label carries its own risks, according to Wedbush analyst Tom Nikic.
“It could backfire on them from a PR perspective,” Nikic told the outlet. “It would still look like they were profiting off of a collaboration with someone who made blatant antisemitic statements.”
Other possible resolutions include liquidating the remaining Yeezy sneakers at discount stores or donating them.
The Post has reached out to Adidas for comment.
Last month, Adidas warned investors that it could take a nearly $1.3 billion loss in revenue due to its Yeezy inventory backlog.
The company warned that it faces a more than $500 million hit to its operating profit this year due to the Yeezy debacle.
“Should the company irrevocably decide not to repurpose any of the existing Yeezy product going forward, this would result in the write-off of the existing Yeezy inventory,” the company said in a post on its website.
West, who has changed his name to Ye, fell out of Forbes’ billionaire ranks after losing his Adidas deal and various other partnerships over the scandal.