Adidas’s financial performance was impacted during the third quarter of the year by “weaker performance from Yeezy shoes designed by Kanye West.” Reuters reported on Wednesday that while the $7.10 billion in revenue that the German sportswear giant generated for the three months ending September 31 beat analysts’ expectations, footwear sales were only up by one percent compared to the same quarter last year.
Speaking about the company’s footwear business this week, adidas CEO Kasper Rorsted pointed to the $2.8 billion in sales coming in thanks to adidas’ Boost offerings and stated that he is “very confident about how the last two months of the year will unfold.” Not all analysts are convinced, though. Christopher Svezia, footwear and apparel analyst at Wedbush Securities, told the Wall Street Journal that “adidas is doing a nice job, not a great job, while others are doing better from a product and consumer engagement standpoint.”
In particular, Svezia told the WSJ that adidas has “got to come up with something more exciting,” with Reuters noting that “some say there is, in fact, a lack of excitement around adidas’ footwear offerings.”
In terms of its Yeezy venture, Rorsted said that the company “decided to limit supplies of Yeezy products this year to maintain their exclusivity,” after loosening the reins on the volume of the initially-extremely-limited sneakers that were being released into the market bearing the name of the rapper-slash-designer.
The “democratization” of adidas’s Yeezy franchise “led to unexpected gains, with sales up more than six times” for Yeezy sneakers, NPD Group’s Senior Sports Advisor Matt Powell reported early this year, but cautioned that it was unclear “whether Yeezy can withstand the pressure of the expanded allocation” in light of the fact that “oversupply can hurt demand.”
As for West, he took the stage at Fast Company’s Innovation Festival alongside Steven Smith, the executive design director at Yeezy Lab, to reveal his new manufacturing endeavors – which center on domestic production and an emphasis on sustainability. As reported by the AP, West said that “he plans to make his manufacturing entirely eco-friendly, moving it all to South and North America in the next two years, including at his 4,000-acre ranch in Cody, Wyoming.” The move will see the company “bring jobs back here,” Smith stated.
In terms of sustainability, Smith said that “eco-concerns are intersecting with what we do,” which comes as the company is looking to alternatives dyes and algae as “greener” alternatives. West echoed this new focus, revealing that “Yeezy is going into innovation. We’re going to be farming and going seed-to-sew and have our own cotton hydroponic farm and our own hemp farm and our own farm, so we can see every element.”
“Our color is a big signature of the brand, but also dyeing is one of the main things that’s impacting the planet and the fashion industry, so just being responsible from A to Z.”