Adidas Sold €500 Million in Yeezys, Does That Mean They're Back?

^{Photo: David Lezcano}

It was a major week for Adidas news, particularly on the Yeezy front. In the last week alone:

• A Financial Times report noted Adidas had €508 million in orders for its Yeezy releases at the end of May and beginning of June. With more demand for the product than there was supply, executives were said to be surprised that appetite comfortably exceeded their expectations.
• Adidas boosted its fiscal year guidance for both revenue and operating profit, with revenue now expected to decline in the mid-single-digits year-over-year rather than high-single-digits previously, and operating losses are expected to amount to €450 million rather than €700 million. Yeezy write-offs are now expected to be €400 million rather than €500 million.
• Adidas announced that it would sell a second round of Yeezy inventory in August. These products were initiated in 2022, and a "significant amount" of proceeds will again be donated to organizations working to combat discrimination and hate, including racism and antisemitism.

Taking all of that news in conjunction, a popular and perhaps sensational reaction was that Yeezy is well on its way to being fully "back". Appetite for the first round of product was strong, Adidas numbers improved as a result, and the company is comfortable moving full steam ahead with another batch of product releases. To some, understandably, it will feel like these are early steps on a path towards the turmoil of the last year becoming a forgotten afterthought and towards a return to business as usual for Yeezy.

Perhaps, though, the events of the last couple months shouldn't be viewed as such an extreme market vote of confidence in the future of the line.

The product itself selling out a couple months ago does not necessarily equate to robust underlying consumer demand. With resale businesses starved for not only Yeezy product but hot product in general, the quick absorption of available inventory was a near guarantee. The question was what would happen after the inventory was purchased from Adidas. That's when you get a better sense of true demand.

The results have been a mixed bag.

There were 15 products released in that first batch. Relative to their retail prices, 9 of the products now trade at a premium on resale markets, and on average, the 15 products trade at an 18% premium. However, five of the products were either Yeezy Slides or Yeezy Foam RNRs, which have low retail prices and almost always sell at a premium as a result. Remove those from the equation, and the pure sneakers trade at a 3% average discount to retail prices, with 4 of the 10 releases trading at a premium. The discount is actually an improvement on what we were seeing for Fall 2022 releases at the time, which was around 16%. However, there were some standout sneakers in the recent batch that skew the numbers higher in comparison, while the fall slate was almost entirely lackluster.

The three standout releases are not surprising. The 350 V2 "Zebra, the 350 "Pirate Black", and the 500 "Utility Black" currently sell at the highest premiums versus resale prices. These are stalwart pairs, highly-coveted and iconic. If there is a takeaway from the early batch of restocks, it's that the most iconic Yeezys have not taken a major hit. They remain in demand, and really, that makes sense. These were foundational pieces of sneaker culture in the 2010s and are therefore less reliant on pure connection to the brand and its namesake. It's the rest of the pack that might struggle to be lifted by a tide that is no longer rising.

In reality though, the same could be said of most brands in the present environment.

It's also worth noting: appetite has mostly declined since release. Across all 15 products, the average performance since release has been a 14% decline. Now, that's not uncommon, particularly in the current market, but still, there isn't building momentum for the brand. As the initial release fades further into the rear view and reseller supply continues to flow into the market, there isn't a rush of inspired demand.

The anticipated August releases are generally more run-of-the-mill, not featuring the same level of icon as the Zebra 350 V2s or the Pirate Black 350s. While there will likely be another relatively quick sell-out - from Adidas directly and this time from retailers - it would not be a surprise if the initial demand on secondary markets is softer. Over time, signals like those may tell a different story about the future of Yeezy than the headlines did this week (or at least the story that some inferred from them).

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