Kanye left, Yeezy continued, but Adidas still “lost”

If there is a 10% profit, the capital will be guaranteed to be used everywhere; if there is a 20% profit, the capital will be active; if there is a 50% profit, the capital will take risks; for the 100% profit, the capital will dare to trample all the world Law; with a profit of more than 300%, capital will dare to commit any crime, and even risk hanging its head.

This classic sentence, many people think it is a famous saying by Marx. In fact, Marx only quoted this passage many times in "Das Kapital", and it was the leader of the British workers' movement, Thomas J. Denning, who really said this. Today, this sentence also has a more down-to-earth expression – as long as you can make money, it's okay to be indecent.

Adidas thinks so, as long as it can make money, it can continue to sell Yeezy after breaking up with Kanye West.

Ye is out, but Yeezy isn't

Even if I say something anti-Semitic, Adidas can't give up on me.

On October 16, Kanye West said this confidently when he was a guest on the Drink Champs podcast, and by the way output some comments questioning the Jewish people. Ten days later, Kanye was slapped in the face. He began to be terminated by the world, rejected by the world, and even visited other brands in person and was asked to go out. The brand could not wait to draw a line with him immediately.

As black, Kanye was accused of racism after he rose to the forefront with anti-Semitic remarks and a "White Lives Matter" statement.

In an environment where political correctness is the most important, Adidas responded "quickly" in less than a month – canceling the contract.

In the termination statement, Adidas said: "Ye's recent remarks and actions are unacceptable, hateful and dangerous. Adidas will stop producing Yeezy products and stop all payments to Kanye and his company."

This cooperation, which was once considered by Adidas as "the most successful in history", was finally ended by Adidas unilaterally. Even though Kanye had made a small fuss about canceling the contract before, accusing Adidas of plagiarism, but in the end the real contract was terminated by the brand first. What drove Adidas' quick response was Kanye's erratic remarks, but it was real money flowing from the brand.

It hurts, it hurts too much.

Adidas itself has to admit that the suspension of Yeezy shoes will have a short-term negative impact of about 250 million euros on the company's net profit in 2022.

The market is not optimistic about Adidas even more.

In recent years, this brand has lacked explosive products, and Yeezy is its star product. Now the suspension of production is equivalent to breaking an arm. Yeezy, with $2 billion in sales in 2021, accounts for 8% of Adidas' total sales, and for a public company, such a breakup is destined to see analysts downgrading the brand's expected earnings.

So the CFO of Adidas has to explain to investors that Yeezy's profitability is often exaggerated in order to stabilize investors. On the other hand, it has to leave a small hole for the brand to continue to sell Yeezy.

We own all the intellectual property, we own all the designs, we own all the shoes that have been released and the new colorways. This is our product, we just don't own the Yeezy name.

Can continue to sell, but may not sell well

This sentence is the same as "White Lives Matter". You can't say it is wrong from the text, but it is a little wrong in the context of reality.

On the one hand, the contract has to be terminated, and on the other hand, it has to continue to sell Kanye's designs. What has changed is the name, and what has remained the same is the designer of the shoes. In a word, it means that the division of seats is not complete, not only to show the company's attitude, but also to continue to make money.

At that time, shoes may not be called Yeezy. But everyone knows who the designer of this shoe is. Does it make sense? You know it's designed by Kanye, the people who buy it know it's designed by Kanye, and the world knows you're out of your contract with Kanye.

You know, many people even criticized that Adidas and Kanye were too slow to cancel the cooperation, and now choosing to continue selling shoes just to change the name is even more "incorrect" to the outside world. After all, if you can't accept the person's point of view, then you shouldn't continue to sell his designs.

Even many secondary sneaker markets have removed Yeezy, but Adidas wants to continue changing its name.

From another point of view, Adidas changed its name and continued, and the new Yeezy shoes that lost the blessing of Kanye may not be able to sell so well.

Darcey Jupp, apparel analyst at GlobalData, agrees: "Adidas claims it is the sole design rights holder for its existing Yeezy products, but it should avoid relaunching products under its own brand. Because these shoes will always be synonymous with West, this It may lead to a weakening of customer demand.”

As the male star with the greatest influence on popular fashion in the past decade, Kanye has been widely recognized for his fashion taste, although he is controversial. Today's hottest Yeezy shoes and frigid earth tones are all trends he pulls alone.

Yeezy's popularity is not only because the shoes are good-looking and easy to wear, but also because Kanye's high-profile behavior and unique design language make shoes a social business card.

Now that social cards are gone, shoes are just shoes. If Adidas restarts selling new Yeezy shoes, it is unlikely to be as successful as before, at least the popularity of shoes in the secondary market may be difficult to reproduce. It is also more and more difficult to sell these existing designs + new colors at high prices.

Politically correct expressions and market reactions are likely to be separated. Even if Kanye is rejected by major brands, few people will throw away their Yeezy shoes, and even few people who buy them will get a refund. After the announcement of the cancellation of the cooperation, the price of Yeezy shoes in the secondary market has increased again, and users want to miss the limited edition of Kanye design that is no longer available.

Montalvan, owner of shopping centre West Nyack Palisades, said he did not see any major changes in prices or demand for the Yeezy brand. They also received only one chargeback for Yeezy shoes after so many days. The termination of the contract has little effect on the existing Yeezy shoes, and only the new Yeezy of Adidas will be hurt.

Of course, Kanye itself is also difficult.

After expressing the meaning of self-reliance, the intellectual property lawyer also interpreted the future development of Yeezy brand from the contract between the two parties. The brand awareness developed by Adidas is very high, but the existing designs do belong to Adidas. If you really want to run a new brand, except for the Yeezy name that can be kept, the designed products need to be brand new.

It's almost a lose-lose situation.

Adidas no longer has the popular Yeezy series, it will slowly become a regular brand like Ultra Boost and NMD, and it is difficult to sell 2 billion a year. Kanye also has to start from 0 and lose the explosions he created.

Even if Yeezy goes on, Adidas will have a hard time

But even if Kanye did not make inappropriate remarks, Yeezy was sold normally, and Adidas had its own crisis.

As an international brand, Adidas needs to express its position as soon as possible on many things, and this position has also made it taste the taste of failure in two markets in recent years.

In March of this year, Adidas joined the international boycott of Russia, temporarily closing its physical stores and online store services in Russia. For brands, a market that accounts for around 3% of total revenue needs to be ignored for now. Although it has always been among the top brands of Russian users' favorite brands, it is even more difficult for Adidas to come back after this boycott.

In China, which once led the overall global growth of the brand, the development of Adidas is also very difficult. The impact of the new crown epidemic, the impact of the Xinjiang cotton incident, and the neglect of localized operations have all caused Adidas to experience negative growth in the Chinese market in the past five fiscal quarters. But even with negative growth for more than a year, China's revenue in the first half of this year still accounted for 15.8% of Adidas' total revenue

It's just that Adidas' negative growth trend can't be stopped, which is even more troublesome.

Adidas hasn't changed much, only the opponent has changed.

Domestic brands such as Anta rely on the strong rise of national tide elements. In addition, their own independent design and production of shoes have also made visible progress. Domestic products have become the choice of more Chinese users. It is more cost-effective and understands Chinese users better. The domestic brand that will launch exclusive shoes for Chinese festivals on festivals has turned over by diligence.

In 2021, Anta's market share of sports shoes and apparel in China will increase by 1 percentage point to 16.2%. This not only surpassed Adidas, which accounted for 14.8%, but also further narrowed the gap with Nike. The CEOs of Adidas all admit that they are not doing well enough:

We don't know enough about consumers, so we leave room for Chinese brands that do better.

In addition to the fact that the strategy of global operation is not acclimatized in China, Adidas' new products in recent years have indeed lacked explosive models.

In addition to Yeezy, the last shoe that became popular was the new NMD in 2015. This series can only attract gold steadily today, and it can't attract attention. To this day, the hottest Adidas shoes in the secondary market are the former Shell Head and Yeezy.

Innovative designs are unpopular, localized operations are not enough, and important markets are lost one after another. In this case, being forced to cut the seat with the Yeezy designed by Kanye was a leak for Adidas.

Not too interesting, not too optimistic.

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