German sportswear retailer, Adidas, has been sued by investors over its now terminated partnership with the Yeezy brand, owned by US designer and rapper, Kanye West, according to reports.
West is not party to the lawsuit, which was filed over allegations that the German firm was aware of his problematic behaviour years before it ended their partnership.
The investors also alleged that the company failed to limit financial losses and take precautionary measures to minimise their exposure.
Adidas in 2013 signed its deal with West, now known as Ye, who designed a line of trainers under the Yeezy brand, which were hugely successful.
However, the company in last October terminated its partnership with West citing some of his offensive controversial statements, including anti-Semitic social media posts.
Adidas in March reported a loss in its fourth quarter, due mainly to charges related to the termination of the Yeezy partnership, compared to last year’s profit.
The company also projects unsold Yeezy products to reduce revenues by around €1.2 billion ($1.3 billion) and operating profit by around €500 million in 2023.
The lawsuit claims that the company was aware about previous questionable behaviour by West, noting an alleged meeting in 2018 where Adidas management reportedly discussed West’s behaviour.
Meanwhile, responding to the allegations and lawsuit, Adidas said that it outright reject these unfounded claims, and will take all necessary measures to vigorously defend themselves against them.
While ending the Yeezy deal, the company last year had noted that it do not tolerate anti-Semitism and any other sort of hate speech, and that Ye’s then comments and actions were unacceptable, hateful and dangerous, and they violated the company’s values of diversity and inclusion, mutual respect and fairness.
Adidas also had launched an investigation after reports that West created a toxic environment at the company.
Adidas then said it continues to review future options for the utilization of its unsold Yeezy inventory.
Following his controversial comments, Ye was forced to cancel a number of scheduled concerts, and lost more than a billion dollars in net worth and lucrative brand partnerships with GAP, fashion brand Balenciaga, and his bank JP Morgan, among others, along with Adidas. His social media handles also were banned.
German sportswear retailer, Adidas, is facing a lawsuit from investors due to its now-terminated partnership with Kanye West's Yeezy brand. It was alleged that the company was aware of West's problematic behavior, yet did not take steps to minimize financial losses and risks. Despite the success of the Yeezy line, Adidas ended the partnership in October 2022 following West’s offensive and anti-Semitic statements.
Adidas reported losses in the fourth quarter of 2022 due to the partnership’s termination and projected around €1.2 billion in reduced revenues and €500 million in reduced operating profit for 2023. Although an investigation was launched regarding West’s behavior, Adidas denies the lawsuit’s claims and is prepared to defend against them. Additionally, Adidas is reviewing future options for unsold Yeezy inventory. Following the controversy, West suffered significant financial and social repercussions, including the loss of brand partnerships and a drop in net worth.
