(NewsNation) — Adidas’ decision to sever ties with Ye for antisemitic comments on social media will be a costly one, reports say.
Speaking with the Washington Post Tuesday, Morningstar analyst David Swartz discussed the artist formerly known as Kanye West’s impact on the German sportswear brand, including that the Grammy Award-winning musician-turned-designer generated an estimated $2 billion a year for the company — close to 10% of the company’s annual revenue.
In a statement, Adidas said they “expected to have a short-term negative impact of up to $250 million on the company’s net income in 2022 given the high seasonality of the fourth quarter.”
That short-term negative impact has already started to take shape, as Adidas shares took a major hit in Germany Monday.
Tuesday, they were down another 4%, but they were down even more earlier in the day and recovered as the trading day was coming to an end in Frankfurt.
And while the recent news has impacted stock prices, others are reporting that the $6 billion sneaker resale market — of which Yeezys are a staple — could be affected as well.
Last week TMZ reported sneaker resellers were holding on to their Yeezy apparel to possibly mark up their merchandise as they awaited Adidas‘ ultimate decision after announcing they had placed the Yeezy deal under review.
Sneaker expert Remo, of the Walk Like Us agency, said the resale market would explode should Adidas choose to end the partnership, “because the shoes will not be produced in mass quantities anymore.”
Now that Adidas has ended its partnership with Ye, it remains to be seen if Remo was right.
While $2 billion in revenue seems like a big hit, Remo believes Adidas can rebound.
“In the last six months, Yeezys have been kinda sitting on the shelves,” Remo said on NewsNation’s “Rush Hour” Tuesday.
Adidas is not the only company to end business relations with Ye, who also has been suspended from Twitter and Instagram over antisemitic posts that the social networks said violated their policies.
According to a memo reviewed by The Wall Street Journal Tuesday, Gap Inc. is also bringing its partnership with Ye to an end. The news comes after Ye announced he was terminating his partnership with the apparel chain earlier this year.
Additionally, Ye’s talent agency, Creative Artists Agency, has dropped him, the Balenciaga fashion house cut ties with him last week, according to Women’s Wear Daily, and JPMorgan Chase and Ye have ended their business relationship, although the banking breakup was in the works even before Ye’s antisemitic comments.
Additionally, MRC Entertainment announced Monday that it is shelving a complete documentary about Ye.