After realizing it couldn’t make a fashion line in partnership with freakin’ Beyonce marketable, Adidas is stepping back to reassess its entire business.
What happened: After a string of financial losses tied to celebrity partnerships, Adidas has plans to right the ship by refocusing on what made it successful in the first place: sports, per The Wall Street Journal. In particular, the company is looking to grow its market share in basketball—which it once dominated before Michael Jordan signed with Nike—and soccer.
- Disgruntled investors yesterday launched a lawsuit claiming the company “routinely ignor[ed]” Kanye West’s extreme behaviour while working on his Yeezy brand.
- The relationship has since ended, but Adidas projects it will lose out to US$1.28 billion in sales this year if it doesn’t sell leftover Yeezy inventory (and it likely will not).
Why it matters: As consumers trim spending, brands will continue cutting back on the nice-to-haves and double down on the basics tied to their original visions. For Adidas, that has also meant consolidating (read: layoffs) its Canadian and US operations into one.
Zoom out: Yeezy isn’t the only celebrity giving Adidas grief… Humanrace, a brand collaboration with the singer/producer Pharrell, saw sales drop 70% last year from its peak. This past March, Adidas also announced it was shuttering Ivy Park, its collab brand with Beyonce, after sales disappointed more than this year’s Grammy Album of the Year.—QH