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Adidas Terminates Ye Partnership, Gap Removes Yeezy Items Over Rapper's Antisemitic Remarks

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Kanye West at an event announcing a partnership with Adidas on June 28, 2016 in Hollywood, California.

  • Adidas ended its partnership with Ye, aka Kanye West, over his recent antisemitic remarks.
  • Hours later, Gap said it would remove its Yeezy items from its stores immediately.
  • Forbes said the loss of the Adidas partnership cost Ye his billionaire status.

Adidas on Tuesday ended its partnership with Ye, formerly known as Kanye West, after the musician made a series of offensive and antisemitic comments.

Hours later, Gap and then Foot Locker said they would immediately remove Yeezy products from its stores.

"Foot Locker, Inc. does not tolerate any form of antisemitism, or hateful and discriminatory behavior. While we remain a partner with adidas and carry a wide assortment of their collections – we will not be supporting any future Yeezy product drops," a Foot Locker spokesperson said.

Gap also shut down YeezyGap.com, which now redirects to the Gap website.

"Antisemitism, racism and hate in any form are inexcusable and not tolerated in accordance with our values," said Gap, which announced in September that it would end its partnership with Ye. The clothing retailer said at the time it would sell through its remaining Yeezy inventory.

Gap and Foot Locker's statements echoed what Adidas said earlier. "Adidas does not tolerate antisemitism and any other sort of hate speech. Ye's recent comments and actions have been unacceptable, hateful and dangerous, and they violate the company's values of diversity and inclusion, mutual respect and fairness," the company said.

"After a thorough review, the company has taken the decision to terminate the partnership with Ye immediately, end production of Yeezy branded products and stop all payments to Ye and his companies. Adidas will stop the Adidas Yeezy business with immediate effect."

Adidas' decision also cost Ye his billionaire status. Forbes estimates that without the Adidas deal, his net worth has dropped to $400 million, which comes from his music catalog, real estate and his 5% stake in ex-Kim Kardashian's shapewear company, Skims. Forbes valued his Adidas deal as adding $1.5 billion to his net worth.

The German sportswear giant had faced pressure from the public and its own employees to cut ties with Ye, who said on a podcast on Oct. 16: "I can say anti-Semitic things, and Adidas can't drop me. Now what?"

Calls on Adidas had also come from at least three legal organizations, as well as anti-racism groups. A Change.org petition set up by the Campaign Against Antisemitism urging Adidas to sever ties with Ye had gathered 169,100 signatures by Tuesday morning.

The Anti-Defamation League, StopAntisemistism and the International Legal Forum applauded the move by Adidas on Tuesday.

"In the end, Adidas' action sends a powerful message that antisemitism & bigotry have NO place in society," the ADL's statement said.

Talent agency CAA confirmed it had dropped Ye as a client Monday, and he was let go by Balenciaga last week.

Twitter and Instagram blocked him over antisemitic remarks. Conservative social media platform Parler then announced Ye had agreed to buy it.

CNBC has contacted representatives for Ye and has yet to receive a reply.

Impact on Adidas

Adidas said this would have a short-term negative impact of up to 250 million euros ($246 million) on net income in 2022 due to high seasonality in the fourth quarter.

It added that it was the "sole owner of all design rights to existing products as well as previous and new colorways under the partnership" and would provide more information during third quarter earnings on Nov. 9.

Adidas fell 4% in morning trading in Frankfurt, Germany, after Bloomberg reported early in the day it was planning to end the partnership.

The company began a review of the partnership on Oct. 6 but had been widely criticized for its inaction since then.

In a LinkedIn post Monday, U.S.-based Adidas employee Sarah Camhi wrote, "It's been 14 days since Kanye started spewing anti-Semitic rhetoric and adidas has remained quiet; both internally to employees as well as externally to our customers."

The director for trade marketing added: "We need to do better as a brand. We need to do better for our employees and we need to do better for our communities. Until adidas takes a stand, I will not stand with Adidas."

The German company began working with Ye in 2013, and in 2016 signed a deal to manufacture and distribute items from his Yeezy clothing line. Adidas has previously said the partnership has had a "tremendous impact" on its business and is one of the most successful collaborations in the history of its industry.

However, Ye has publicly criticized Adidas, along with some of his other corporate partners, such as retailer Gap, in recent months.

He told CNBC that Adidas was "copying" his ideas, and also posted social media tirades against the company, specifically targeting Chief Executive Kasper Rorsted and board members.

The Yeezy brand makes nearly $2 billion a year for Adidas, 10% of its revenue, according to Morningstar analyst David Swartz.

"It has been an important product line for Adidas and has helped bring its North America business back to relevance. It has made Adidas relevant in the collectors' market and probably allows it to reach a demo that it has missed," Swartz previously told CNBC.

"Adidas struggles to compete with Nike for top sponsorships, so Yeezy was one big advantage," he added.

In a note Tuesday ahead of the announcement, analysts at Credit Suisse laid out various risks to the company, including a recent profit warning that was greater than expected.

Copyright CNBC
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