Adidas AG (ETR:ADSGN) plans to auction off an estimated €1.2bn of unsold Yeezy trainers and donate the gains to charity after ending its partnership with rapper Kanye West last year.
The German sportswear giant's chief executive, Björn Gulden, informed shareholders of the plans at today's annual shareholder meeting, where a major institutional investor criticised a probe into the group's handling of misconduct allegations against West.
Shares in the company were up 2.4% to €167.56 midway through the AGM.
Last autumn the brand cancelled its contract with West, known as Ye, on the back of the rapper's string of anti-Semitic rants and Nazi-sympathising rhetoric.
Gulden said the stock would not be destroyed but the company will “try to sell parts of the product” and donate the profit to charities supporting individuals "who were hurt" by West’s words.
Last week the company said the unsold stock of Yeezy footwear had an estimated value of around €1.2bn.
A group of investors are currently suing the company, claiming it knew about West’s "problematic behaviour" and failed to mitigate its exposure to the financial risks.
At the AGM, the head of ESG at Union Investment, one of Germany's largest fund management firms, demanded the group disclose the results of its investigation and called on the shoes to be burnt.
Gulden responded he did not think the Yeezy footwear should be destroyed.
The CEO said a decision on what to do with the Yeezy shoes had not been taken, "as not all of it is in our hands", and it was an extremely complex decision, with Ye having also hurt the Jewish community but others too.
Last week the company reported stronger quarterly revenues than expected everywhere apart from in North America, where sales were most affected by the cancellation of the Yeezy contract.
North American growth tumbled almost 20%, or 5% excluding Yeezy, with Gulden warning of "a bumpy year with disappointing numbers" ahead, a period of transition to "build a strong base for a better 2024 and a good 2025 and beyond".
Adidas is forecasting a loss this year after ending the Yeezy partnership.
The Yeezy episode has damaged Adidas’s reputation, GlobalData senior apparel analyst Pippa Stephens, who said selling the brand’s remaining stock just to recoup costs could be a risky strategy.
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