Shareholders have filed a class action lawsuit against Adidas over the Yeezy brand under the claim that the company had knowledge of Kanye West’s problematic behavior before ending their partnership.
Background
Kanye and Adidas began their partnership in 2013 following a failed collaboration with Nike as he was unable to have his desired creative freedom and obtain royalties. The collaboration between Kanye and Adidas subsequently resulted in Adidas sales increasing by 18 percent within the next 3 years, and by 2019 the Yeezy brand was valued at 1 billion dollars whilst generating 1.3 billion in sales.
However, amidst the success Kanye’s relationship with Adidas began deteriorating due to his outspoken political nature, making their partnership problematic. In May 2018, Kanye said that “slavery sounds like a choice” in which the CEO of Adidas, Kasper Rorsted, was forced to make a comment reaffirming the company’s relationship with Kanye West. In June 2022, Kanye accused Rorsted of ripping off his Yeezy Slide design to create the company's Adilette slide. The rapper later took to social media to call them "a fake Yeezy" and demand Rorsted speak with him. Finally, Adidas cut ties with the rapper after he praised Adolf Hitler and the Nazis in his anti-semitic comments in an interview on Infowars.
What is currently going on
Shareholders in Adidas filed a class action lawsuit against the company due to negligence to minimise risk exposure after Kanye’s anti-semitic comments led to a subsequent steep decline of the share price for Adidas. The lawsuit alleges that in an annual report for the year 2018, Adidas "ignored serious issues affecting the Partnership" with Kanye "and the resulting potential risk to shareholders". Additionally, in an inventory risk section of the report, the lawsuit further states that Adidas ignored the risks of oversupply of Yeezy-branded shoes in the event that the partnership were to suddenly end. However, Adidas stands to lose up to 1.3 billion dollars due to oversupply in Yeezys. If the company decides not to sell them it could potentially report its first loss in three decades.
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