Adidas cuts its Ye ties too late for some staff, investors

Ye, the controversial rapper formerly known as Kanye West, had taunted Adidas, saying he could make antisemitic remarks and that the brand was powerless to “drop” him.

For a while it looked like he might be right. As other retailers moved quickly to cut ties with Ye following several offensive outbursts, the German sneaker brand appeared reluctant to end the partnership, even releasing its latest Yeezy model on Saturday.

This was the same weekend that a hate group in Los Angeles hung a banner over a highway overpass that read, “Honk, if you know Kanye is right about the Jews,” while offering Nazi salutes to oncoming traffic.

It was only Tuesday that Adidas finally decided to sever links with Ye, condemning the rapper’s “unacceptable, hateful and dangerous” comments.

The company is taking a $246.5 million hit to this year’s profits to end a partnership it once dubbed one of the industry’s “most successful collaborations” but it could be too late to repair the long-term damage to the brand.

Mired in multiple crises and reeling from months of poor performance, Adidas still faces the threat of a boycott of its shoes and apparel in the U.S. and Europe, where its slow response to Ye’s outbursts has angered consumers.

Even its own employees have been quick to voice their disapproval at the company’s sluggish reaction.

“As a member of the Jewish community, I can no longer stay silent on behalf of the brand that employs me.

“Not saying anything, is saying everything,” one employee wrote on LinkedIn before Adidas cut ties with Ye, eliciting like-minded comments and support from many people.

It’s important for any company – and a German company in particular – to call out comments like Ye’s that are antisemitic, Janne Werning, head of shareholder Union Investment’s capital markets and stewardship, said in a phone interview.

“This must have consequences. This is quite clear from a reputation-risk perspective,” Werning said.

The turmoil carries echoes of 2020, when Adidas reacted slowly to employee protests – especially at its North American headquarters in Oregon – over its handling of diversity matters internally.

Those protests gained prominence on the back of the global outrage following the murder of George Floyd by a white police officer. Ultimately, Adidas replaced its head of human resources and said it would do better.

Chief Executive Kasper Rorsted went on an internal listening tour.

Rorsted is now on his way out the door, following a six-year reign that is ending in controversy and leaves the German company with a market value about a seventh of that of U.S. rival Nike Inc.

While Adidas has said it will hire a replacement CEO in 2023, it’s created a sense among many investors and analysts of being adrift at a time of crisis.

The Yeezy situation is only one of many problems facing Adidas, which is already struggling in China – its hottest growth spot before the pandemic – amid consumer boycotts of Western brands.

Notably, arch-rival Nike has done a better job there in recent months of winning back customers.

Adidas last week put out its second profit warning in three months, citing slowing momentum in Europe and North America amid soaring inflation.

The large hit to profits from ending its partnership with Yeezy will only make a difficult situation worse.

“West has shown no remorse or contrition for his string of antisemitic remarks filled with hate and lies. He believed that as long as the money kept rolling in he could speak with impunity,” said Ted Deutch, chief executive officer of the American Jewish Committee, who welcomed Adidas’s “decisive if belated action.”

Jonathan Greenblatt, the CEO and national director of the Anti-Defamation League who spent days highlighting Adidas’s past “supporting the Hitler Youth movement” on social media, said that “in the end, Adidas’ action sends a powerful message that antisemitism and bigotry have no place in society.”

Ye could not be reached for comment. A representative for DKC Public Relations said the company, which previously represented Ye, was no longer working with him.

The saga with Ye may not be over yet with Adidas claiming it is the sole owner of all existing and previous designs, under the partnership, including the Boost 350 V2 “Salt” sneaker it launched on Saturday.