In This Article:
(Repeats Wednesday's story with no changes)
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Yeezy split shows risk of celebrity partnerships
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Adidas was overly reliant on Yeezy brand, analysts say
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New CEO seeks to refocus on sports
By Helen Reid
LONDON, March 8 (Reuters) - Adidas, burnt by the end of its tie-up with the artist formerly known as Kanye West, needs a new focus but should think more tactically about fresh celebrity partnerships and not count so much on one personality, industry experts said.
New chief executive Bjorn Gulden on Wednesday stood by the company's decision to cut ties with the rapper, known as Ye since 2021, but also pointed to the unique value of the Yeezy shoe brand, which became a key profit driver.
Sportswear firms have for years worked with celebrities, in lucrative but potentially risky deals. Speaking to reporters on Wednesday, Gulden said Adidas would keep partnering not just with athletes but celebrities and artists.
"It's not a matter of either/or, you have to do both," he said. "You build credibility as a performance brand by being with athletes, but there's very few athletes that you can do lifestyle with."
Gulden did, however, hint at a change of emphasis at Adidas, saying the company needs to refocus on its core.
"You will see us invest in more sports, and be wider again than we have been, because that is also the DNA of this company," he said.
Gulden, who took the reins on Jan. 1, has pledged to turn Adidas around after it warned of a possible 700 million euro operating loss this year as a result of cutting ties with Ye.
The scale of the hit shocked investors as Adidas had not previously disclosed the revenue generated by Yeezy, the result of what the company said in 2016 was "the most significant partnership ever created between a non-athlete and an athletic brand".
Six years after calling Ye a "creative pioneer" with "visionary imagination", Adidas ended the collaboration citing "unacceptable, hateful and dangerous" comments made by the star on social media and in interviews starting in October last year.
In learning from this episode, Adidas could be more cautious in selecting celebrities to partner with, and make sure it spreads its bets, said Cristina Fernandez, senior research analyst at Telsey Advisory Group in New York.
"To me it's about diversification, but also about that specific celebrity or athlete maybe not being as risky as this one was."
One example of a long-lived and lucrative relationship is the 38-year partnership between U.S. sportswear giant Nike and Michael Jordan for the Air Jordan line of basketball shoes and clothing.