Adidas is on a better-than-usual run. The sporting goods company raised its full year guidance after it posted a better-than-expected performance during its first quarter. And those forecasts are thanks to — of all things — its Yeezy collection.
Adidas has dedicated a great deal of time to its Yeezy collection — in part because the collaboration, launched with Ye (formerly known as Kanye West), has been fraught with the rapper and producer’s PR messes. Adidas has been caught in the crossfire of Ye’s controversies, among them saying that “slavery was a choice” and wearing a shirt reading “White Lives Matter” in public. It wasn’t until he showed Adidas executives a pornographic video in late 2022 that the company decided it was time to end the relationship — although investigations would later reveal Adidas tolerated much more misconduct behind the scenes for a decade.
But while the company may have taken a multi-billion dollar hit on the sneakers, offloading its Yeezy inventory has actually buoyed Adidas’ profits.
The latest Yeezy drop has generated revenue of about €150 million ($159.28 million) and an operating profit of around €50 million ($53 million) during the first quarter, the company said. Overall, Adidas now expects revenue to increase by a mid to high single digit rate with operating profit to be around €700 million ($743.7 million), for the year. The company’s previous forecast was around €500 million ($530.8 million), it added.
The remaining Yeezy inventory is expected to bring in additional sales of around €200 million ($212.35 million), but will not contribute to profit, it added.
Shares of Adidas were slightly up during afternoon hours on the news, trading at roughly $110.
While Yeezy inventory dribbles out, other sneaker models like the Gazelle, Samba, and Spezia could be poised to boost sales moving forward. The terrace trainers range has contributed to a significant share of sales for Foot Locker, according to chief executive Mary Dillon. Consumers are “very interested in the lifestyle running brands,” she said during an interview at J.P. Morgan’s 10th Annual Retail Round-Up investor conference in March.