Beyoncé and Yeezy Spell Double Trouble for adidas — Retail Bum

German sportswear giant adidas is having a rough start to the year, with sales of its IVY PARK line reporting a steep decline and piled up Yeezy inventory adding to the company’s woes.

Adidas launched its streetwear line, IVY PARK, in collaboration with Grammy Award-winning singer Beyoncé in 2016, a project the singer called the partnership of a lifetime. Unfortunately, for adidas, the product line is far from meeting expectations. According to the Wall Street Journal, almost half of the IVY PARK line has gone unsold for the past five of the six seasons. In 2022, the product line sold $40 million worth of products, a 57% decline compared to the year before. And in 2023, the brand expects just $65 million in sales, which is significantly lower than the previous target of $335 million.

And then there is Yeezy — a gift that keeps giving. According to adidas, the company’s decision not to sell the remaining Yeezy inventory will result in a $1.2 billion hit to the company’s revenue.

If the company were to write off the inventory, it would lead to an additional $536.6 million drop in its operating profit in addition to $214.6 million in one-off costs.

“Against this background, Adidas expects currency-neutral sales to decline at a high-single-digit rate in 2023,” the company said in its statement.

Photo credit: adidas

Originally published at https://retailbum.com on February 10, 2023.