terminated its contract with Kanye and stopped production of coconut shoes
On October 26, "Adidas terminated cooperation with Kanye" became a hot search on Weibo . The night before, Adidas announced that the brand will terminate its cooperation with American rapper and fashion designer Kanye West (Chinese nickname Kanye).
Kanye, original name Kanye West (Kanye West, now stage name Ye), was born in Atlanta, USA in June 1977. He is a famous American male singer and music producer.
In the shoe and clothing industry, Kanye’s most praised design work is the once popular Yeezy series trendy shoes, commonly known as “coconut shoes”. However, as Kanye wore a new sweatshirt with "White Lives Matter" on the back during Paris Fashion Week , it caused racial discrimination and the adidas that cooperated with him was also affected. In response, Adidas stated in a statement: "Ye's recent remarks and behaviors are unacceptable, hateful and dangerous. Adidas will stop producing Yeezy brand products and stop paying all payments to Ye and its company." The suspension of
coconut shoes may be an unspeakable pain for Adidas. It is understood that the coconut shoes designed by Kanye occupy a relatively important position in Adidas' financial report. Financial report data shows that Kanye’s Yeezy series is Adidas’ current “king of sales”, accounting for as much as 8% of Adidas’ sales. In 2021, the sales of Adidas’ Yeezy series sneakers reached nearly US$1.7 billion, and increased by 31% year-on-year.
In the view of Cheng Weixiong, an independent analyst in the shoe and clothing industry, Adidas has rarely had hot products on the product for so many years. The suspension of coconut shoes has a great impact on Adidas, which has poor performance and does not have outstanding best-selling categories.
Adidas also revealed the negative impact of this termination of the contract in the statement. Adidas said that given the high seasonality in the fourth quarter, this is expected to have a short-term negative impact on the company's net profit in 2022.
At the same time, some media reported that some investment institutions have downgraded their ratings on Adidas based on the breakdown of cooperation.
It is understood that the earliest joint brand of the Yeezy series was the Air Yeezy series sneakers launched by Nike. In 2013, Kanye moved to Adidas with Yeezy series sneakers. In 2016, Adidas and Kanye signed an agreement to produce and distribute Yeezy series products. According to the original agreement, the contract expires in 2026. Now that the cooperation is terminated early, Adidas has trouble saying.
Beijing Business Daily reporter interviewed Adidas on issues related to this termination, but no reply was received as of press time.
lack of competitiveness
Losing "coconut shoes" is a worse problem for Adidas.
On October 21, Adidas released its third-quarter performance report, saying that sales in the third quarter of 2022 were 6.408 billion euros, a year-on-year increase of 11%; net profit was 179 million euros, a year-on-year decrease of 62.6%. Among them, Greater China's revenue was under pressure in the third quarter, with a double-digit decline year-on-year.
It is worth mentioning that since 2022, Adidas' performance has declined frequently. Financial report data shows that Adidas achieved net sales of 5.302 billion euros in the first quarter, a year-on-year increase of 0.6%; net profit was 490 million euros, a year-on-year decrease of 11.5%. Greater China sales fell by 35%. Net sales in the second quarter were 5.596 billion euros, up 10.2% year-on-year; net profit was 309 million euros, down 24.2% year-on-year; Greater China fell 35% again.
Regarding the poor development of the Chinese market, Adidas CEO Rosde previously mentioned: "Chinese consumers have changed, and market demand has been biased towards local brands rather than global brands." The difference between
and Adidas' performance decline is that the performance of local sports brands is relatively optimistic. Financial report data shows that in the first half of 2022, Li Ning 's revenue increased by 21.69%, and net profit increased by 11.57%; XP 's revenue increased by 37.45%, and net profit increased by 38.42%; Anta 's revenue increased by 13.82%.
Pangu Think Tank senior researcher Jiang Han said that Adidas's own market competitiveness has begun to weaken, and a large number of Chinese national trend sports brands have begun to rise. The entire Chinese national trend sports brands represented by Li Ning, Anta, Xtep, Hongxing Erke , etc. have shown a relatively strong market influence in the market, which has also brought huge advantages to the current market development impact. With one increase and the other decrease, the entire international brands represented by Adidas have shown a downward trend in the Chinese market.
It is understood that due to the decline in performance, Adi Das significantly lowered its annual net profit forecast to 500 million euros, which was previously expected to be 1.3 billion euros, with a reduction of more than 60%.
However, in Cheng Weixiong's view, the domestic market is still dominated by international brands among all mid-to-high-end brands. Local brands represented by Li Ning and Anta have no ability to surpass in mid-to-high-end categories, but the second- and third-tier international brands acquired by Li Ning and Anta brands have intensified their challenges to top brands such as Adidas.
"How to grasp the market, enhance market influence, reverse the decline in performance, and stabilize customers are the things that Adidas needs to consider the most. If it cannot be reversed in time, Adidas is likely to continue to decline in amid the huge competitive pressure." Jiang Han said.
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Beijing Business Daily reporter | Zhang Junhua
Image source | Adidas official website
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