Alleging that the clothing company failed to minimize the damage over their since-terminated partnership with Kanye West, which resulted in a sharp decline in the clothing company stock, Adidas shareholders have filed a class action lawsuit.
Filed on Friday (4.28,) in an Oregon district court and obtained by Rolling Stone, the law suit claims that Adidas had knowledge as far back as 2018 that West’s controversial comments could impact the company’s stock price, yet they remained in business with the embattled rapper up until his string of antisemitic rants made the partnership untenable that left the corporation with $1.2 billion worth of unsold shoes.
The class action lawsuit included a protracted collection of controversial statements by West prior to his anti-semitic rant, stating that Adidas failed to mitigate the potential damage to their brand. Case in point was when Kanye said in a May 2018 interview that slavery “sounds like a choice,” then-CEO Kasper Rorsted (who since stepped down in 2023) stood by the rapper, noting that while West made “comments we don’t support… [Kanye] has been and is a very important part of our strategy and has been a fantastic creator.”
In the aftermath of that controversy, the lawsuit alleges that Adidas “ignored the risks of excessive Yeezy branded shoe inventory in the event that the Partnership were to suddenly end, and in particular, if demand for the footwear was to fall due to any controversy surrounding West.” (The class action lawsuit covers anyone who bought Adidas stock between May 3, 2018 — when West made his slavery remarks — until 2023.)
Adidas’ annual reports during 2019, 2020 and 2021 canvassed West’s MAGA hat-wearing days and his failed run for president and also addressed the risk of remaining in business with the musician. The situation reached the breaking point in October 2022 when West began his (public) religious tirades, forcing Adidas to sever ties.
In the aftermath of the West breakup, Adidas’ stocks dropped in November of 2022 and while they eventually rebounded, the stocks dropped again in February 2023 when the company announced to shareholders that “failure to sell the stock of Yeezy’s (valued at $1.29 billion) would accordingly lower Company revenue” by that same amount, and if the company didn’t “repurpose” the inventory, they expected “an operating loss of 700 million euros in 2023.”
The lawsuit claims that senior officers and directors at Adidas “acted with reckless disregard for the truth” and that the mega-brand’s market price was “artificially inflated” by obscuring the risks associated with the Yeezy partnership. “As a result of the wrongful conduct alleged herein, Plaintiff and other members of the Class have suffered damages in an amount to be established at trial,” the lawsuit adds.
In a statement to the BBC about the lawsuit, Adidas said “We outright reject these unfounded claims.” West himself is not among the defendants on the lawsuit.