Last week, Adidas and Allbirds both reported grim tidings in their earnings reports, while Khaite announced a new investment partner. Don’t forget to subscribe to the Glossy Podcast for interviews with fashion industry leaders and Week in Review episodes, and the Glossy Beauty Podcast for interviews from the beauty industry. –Danny Parisi, sr. fashion reporter
Adidas looks to offload unsold Yeezys
Adidas has $1.3 billion worth of unsold Yeezy sneakers sitting in warehouses right now, but the company is inching closer to a solution. Yeezy sneakers made up 7% of the company’s revenue before the fiery implosion of its partnership with Kanye West late last year. The losses from that breakup could add up to more than $700 million, if Adidas decides to simply write off the unsold shoes.
Continuing to sell the sneakers comes with reputational damage, new CEO Bjørn Gulden said on Adidas’s earnings call on Wednesday. But destroying the product has environmental concerns. It would be a colossal waste of resources. Adidas has also reportedly received multiple offers to buy the Yeezy license, but has denied them all.
The most likely route, Gulden said on the call, will be continuing to sell the sneakers and split the proceeds among various charities. But even that comes with an additional question: Do you sell them at the same prices or lower? Gulden said Adidas is still working out the details of how exactly it will handle the pricing aspect.
Allbirds continues to struggle
Allbirds is also in a tough situation. The company went public 18 months ago and promised investors big growth, which has yet to materialize. Revenue in the last quarter, reported on Thursday, sank 13% to $84 million, with losses at as much as $29 million.
Co-CEO Joey Zwillinger blamed the losses on trying to win over young people and runners, two cohorts who did not show up for the brand. Allbirds launched activewear and apparel two years ago, but has pared back on seasonal and niche categories like activewear to focus on more seasonless, general-interest items like T-shirts that can sell anytime.
To turn things around, Allbirds’ CFO Mike Bufano is stepping down on April 24 to be replaced by Annie Mitchell from Gymshark. Allbirds will also halt its store expansion plan in a cost-cutting effort. A slate of new stores had been touted during its IPO as one of the key ways it would grow.
Khaite gets a new investment partner
A year after winning the CFDA’s Womenswear Designer of the Year Award, Catherine Holstein and her buzzy brand Khaite have a new investment partner. The brand announced an investment from growth equity firm Stripes, which has invested in brands like On Running. The announcement did not disclose the investment amount but it’s clear what the money will go toward: physical retail. Khaite opened its first store in February and plans to open 10 more in the next five years.