Adidas stock rebounds amid sales impacts, uncertainty tied to unsold Yeezy merchandise

Yahoo Finance Live discusses Adidas stock and the uncertainty surrounding a large quantity of unsold Yeezy merchandise.

Video transcript

- I'm taking a look at Adidas, today closing the day higher, actually, on a bit of upbeat comments about the future and also some of the fallout from the company's breakup with Kanye West. So that kind of already being baked into the stock price today. And so, really, what happened here, Dave, is the quarterly numbers came in pretty ugly. And so net profit for all of 2022 falling more than 80%. Revenue growing just 1%. But that was after the company initially guided for about 20% growth on the year.

And the company reiterating it could lose more than $750 million in potential profit this year if it completely withholds all of its inventory related to Yeezy. And that's where I want to zone in here is that Yeezy inventory. So we did not learn a lot more about what they plan to do with it. They're still basically debating, do they sell the Yeezy inventory? Do they put more of it out there? Do they just hold it? It's worth over a billion dollars in sales they've estimated.

And one interesting note from the call. They said that they've had over 500 corporations reach out about it. And, basically, they don't want to donate the shoes. I think that's where a lot of people think you could go. You donate the shoes. Shoe resale value's huge. People would get them as donations. And then next thing you know, more Yeezy merchandise is going to be online and people are going to be looking to sell them. And Adidas really just doesn't want these shoes out there, especially in that capacity.

- And that's literally what the CEO Bjorn Golden talked about on the earnings call. He's got a massive challenge on his hand. Just took over January 1, their brand new CEO. There's literally talk of no doubt, no joke, burning the shoes, to your point.

Now, they've spiked on the secondary market. They're not going to find their way out of that problem. One word-- messy. How have they not capitalize on the most popular athlete on the planet, with 400 million Instagram followers, with the most liked Instagram post of all time? I'm really surprised they haven't found a lifestyle shoe. Yes, he has a cleat to wear on the field. You literally have the most identifiable popular athlete on the planet. Build a shoe line around him. No one needs my advice on shoes.

- They do. They actually do need your advice.

- But I am offering it unsolicited.

- That's a good idea.

- I think it is an absolute no brainer for Adidas.

- Yeah. It would make a lot of sense. I think the one criticism of Goldman on this call was a lot of his vision in terms of that product innovation that we know is so important to him. That lacked a lot of the detail. That was kind of the feedback here from analysts today. But, certainly, they need to do something to turn it back around and get more competitive with a name like Nike out there light years behind them.

- They do have an $830 million sponsorship deal with the MLS that just started. So they're really going to have to lean into that and hope that lead can succeed.