Yeezy was a fashion brand that arose from a collaboration between German sportswear company Adidas and entrepreneur and music artist Kanye West.
The first product to be released under the Yeezy brand was a sneaker known as the Boost 750.
Launched in February 2015, the sneakers were soon followed by high-end, limited-edition jackets, track pants, shirts, socks, lingerie, and slippers, among other items.
In the years that followed, Yeezy became a wildly successful brand with Forbes even calling it “one of the great retail stores of the century” in a 2020 article.
While Yeezy inspired a multitude of other brands in the fashion industry and earned revenue in the billions, the collaboration between West and Adidas ended abruptly in October 2022.
Let’s expand on what transpired below and the role that Yeezy’s ownership structure played.
| Aspect | Description | Analysis | Examples |
|---|---|---|---|
| Products and Services | Yeezy primarily offers a range of fashion and footwear products. Its product lineup includes sneakers, clothing, and accessories. Yeezy is known for its minimalist and streetwear-inspired designs, often characterized by neutral colors and simple silhouettes. The brand aims to create fashion-forward, comfortable, and versatile items. | Yeezy’s core products are fashion and footwear items, with a focus on sneakers, clothing, and accessories. The brand is recognized for its minimalist and streetwear-inspired designs, which appeal to fashion-forward consumers. The use of neutral colors and simple silhouettes adds to the brand’s signature style. Yeezy’s products are designed to be comfortable and versatile. | Fashion and footwear products, including sneakers, clothing, and accessories, minimalist and streetwear-inspired designs, use of neutral colors and simple silhouettes, appeal to fashion-forward consumers, focus on comfort and versatility in products. |
| Revenue Streams | Yeezy generates revenue primarily through the sale of its fashion and footwear products. The brand often releases limited-edition and highly sought-after items, leading to high demand and premium pricing. Additionally, collaborations and partnerships with other fashion brands, retailers, and platforms can contribute to revenue. | The primary source of revenue for Yeezy is the sale of its fashion and footwear products. Limited-edition releases and high demand often result in premium pricing. Collaborations and partnerships with other fashion brands, retailers, and platforms create additional revenue streams. Yeezy’s ability to create buzz and exclusivity enhances its market value. | Revenue from the sale of fashion and footwear products, premium pricing due to limited-edition releases and high demand, additional income from collaborations and partnerships with other fashion brands, retailers, and platforms, market value enhanced by buzz and exclusivity. |
| Customer Segments | Yeezy targets a customer segment consisting of fashion-conscious consumers who appreciate minimalist and streetwear-inspired styles. These individuals often seek trendy and comfortable clothing and footwear. Yeezy’s products are designed to appeal to a broad range of age groups, primarily those interested in contemporary fashion trends. | Customer segments for Yeezy include fashion-conscious consumers who favor minimalist and streetwear-inspired styles, seek trendy and comfortable clothing and footwear, and belong to a broad range of age groups interested in contemporary fashion trends. Yeezy aims to maintain a diverse customer base within the fashion-conscious market. | Fashion-conscious consumers preferring minimalist and streetwear-inspired styles, seeking trendy and comfortable clothing and footwear, diverse age groups interested in contemporary fashion trends, diverse customer base within the fashion-conscious market. |
| Distribution Channels | Yeezy primarily distributes its products through its official website and select high-end retailers. The brand employs a direct-to-consumer approach through its website to maintain control over pricing and branding. Limited-edition releases are often sold through special events or collaborations with retailers. Social media and celebrity endorsements play a significant role in brand visibility and marketing. | Distribution channels for Yeezy include its official website and exclusive high-end retailers. A direct-to-consumer approach via the website allows the brand to control pricing and maintain its brand identity. Limited-edition releases are often distributed through special events or partnerships with select retailers. Social media and celebrity endorsements are key for brand visibility and marketing efforts. Yeezy combines online and offline channels strategically. | Distribution through official website and high-end retailers, direct-to-consumer approach for pricing control and brand identity, limited-edition releases through special events and retailer collaborations, social media and celebrity endorsements for brand visibility and marketing, strategic combination of online and offline channels. |
| Key Partnerships | Yeezy collaborates with various partners to expand its reach and enhance its product offerings. These partnerships can include collaborations with other fashion brands, retailers, and platforms for co-branded collections or exclusive releases. Additionally, Yeezy has partnered with athletic brands like Adidas for the production and distribution of its sneakers. Celebrity endorsements, particularly from Kanye West himself, also contribute to the brand’s appeal. | Collaborations with other fashion brands, retailers, and platforms allow Yeezy to expand its reach and offer co-branded collections or exclusive releases, adding novelty and variety. Partnerships with athletic brands like Adidas facilitate production and distribution of Yeezy sneakers. Celebrity endorsements, especially from Kanye West, boost the brand’s appeal and influence. These partnerships play a pivotal role in Yeezy’s success. | Collaborations with fashion brands, retailers, and platforms for expanded reach and co-branded collections, partnerships with athletic brands like Adidas for production and distribution of sneakers, celebrity endorsements, particularly from Kanye West, for brand appeal and influence, pivotal role of partnerships in Yeezy’s success. |
| Key Resources | Yeezy’s key resources include its product designs and aesthetics, production and manufacturing capabilities, official website and e-commerce platform, marketing and advertising campaigns, partnerships with other brands and retailers, and the celebrity status of its founder, Kanye West. These resources enable Yeezy to create, produce, and market its fashion and footwear products effectively. | Key resources for Yeezy encompass its distinctive product designs and aesthetics, production and manufacturing capabilities, official website and e-commerce platform for direct-to-consumer sales, marketing and advertising capabilities, partnerships with other brands and retailers, and the celebrity status of Kanye West. These resources collectively empower Yeezy to design, produce, and market its fashion and footwear products efficiently. | Distinctive product designs and aesthetics, production and manufacturing capabilities, official website and e-commerce platform for direct-to-consumer sales, marketing and advertising capabilities, partnerships with other brands and retailers, celebrity status of Kanye West, efficient creation, production, and marketing of fashion and footwear products. |
| Cost Structure | Yeezy incurs costs related to product design and development, manufacturing and production, marketing and advertising campaigns, personnel salaries, and partnerships and collaborations. Manufacturing and production expenses can be substantial, especially for high-quality materials and craftsmanship. Marketing and advertising costs are essential for brand visibility and promotion. Partnerships and collaborations may involve licensing or revenue-sharing agreements. | Costs related to Yeezy’s operations include expenses for product design and development, manufacturing and production, marketing and advertising campaigns, personnel salaries, and partnerships and collaborations. Manufacturing and production costs can be significant due to the use of high-quality materials and craftsmanship. Marketing and advertising expenses are crucial for maintaining brand visibility and promoting products. Partnerships and collaborations may entail licensing or revenue-sharing agreements, affecting the cost structure. Yeezy manages its costs to optimize profitability. | Costs related to product design and development, manufacturing and production, marketing and advertising campaigns, personnel salaries, partnerships and collaborations, substantial manufacturing and production expenses for high-quality materials and craftsmanship, essential marketing and advertising costs for brand visibility and product promotion, cost management for profitability optimization. |
| Competitive Advantage | Yeezy’s competitive advantage is based on its unique and minimalist fashion designs, the exclusivity of limited-edition releases, and its association with Kanye West, a highly influential celebrity. Collaborations with other brands and retailers add novelty and variety to its offerings. The brand’s direct-to-consumer approach and controlled distribution maintain brand exclusivity. | Yeezy’s competitive advantage derives from its distinctive minimalist fashion designs, exclusivity of limited-edition releases, and the strong association with Kanye West, an influential celebrity. Collaborations with other brands and retailers bring freshness and diversity to its product lineup. The direct-to-consumer approach and controlled distribution channels contribute to brand exclusivity, fostering a sense of luxury and desirability among consumers. | Distinctive minimalist fashion designs, exclusivity of limited-edition releases, association with influential celebrity Kanye West, collaborations with other brands for novelty and diversity, direct-to-consumer approach and controlled distribution channels for brand exclusivity, luxury, and desirability. |
Yeezy’s original ownership structure
In their aforementioned article, Forbes noted that Yeezy was, at the time, a “complicated asset” that West 100% owned but which was tied to Adidas for a period of five years.
Over this period, the sports company was responsible for production, marketing, and distribution.
As part of the deal, West would also pocket a royalty of around 11% once fees and other expenses were deducted.
Adidas and West part ways
Adidas parted ways with West after the rapper made a series of offensive remarks that it could no longer overlook.
The company noted that the decision would cost it around $250 million in net profit and leave it on the hunt for another celebrity to help it compete with its main rival Nike.
Who owns Yeezy now?
Production of Yeezy sportswear ended just as quickly as the royalty payments to West. This left Adidas in a predicament. The company owned the rights to everything associated with the Yeezy brand such as product design, but it did not own the brand name itself.
Post the end of the collaboration, Adidas had to determine how to solve its predicament and also how could it sell its existing inventory.
Complicating the decision was the fact that Yeezy’s profitability as a business had been overstated since costs only included product-related expenses and not the overheads absorbed by Adidas.
In a Fortune article, however, Adidas CFO Harm Ohlmeyer admitted that since the company would save around 300 million euros on royalties and marketing fees, the impact on its bottom line would be mostly mitigated in 2023.
Adidas moves on
In November 2022, Adidas decided to continue to sell products from its inventory without the Yeezy name or branding.
The company appointed the former head of Puma Bjørn Gulden as the new CEO, with Gulden tasked with finding ways to replace the 250 million euros in lost profit and repair damage to the Adidas brand.
Some pundits questioned Adidas’ move to continue to sell the sneakers, arguing that the range would forever be associated with West despite the lack of Yeezy branding.
Adidas vs. Nike
Adidas and Nike are the two giants in the sportswear industry.
Indeed 2022, where Adidas generated over €22 billion in revenue (about $24 billion) in 2022, Nike generated twice that, at over $46 billion in revenue.
Nike has been quite successful in boosting its revenue over the years by generating demand for its brands through athlete collaborations.
Yet, the incredible success of Nike is also due to the further rise of Jordan’s brand to iconic status and yet also as a top-selling brand within the company.
Indeed, as of 2022, the Jordan brand generated over $5 billion in revenue for Nike or more than 10% of its revenue!
Jordan vs. Yeezy
Yeezy has been one of the few brands replicating Jordan’s success.
Yet, for some context, by 2022, when Jordan generated $5 billion in revenue, Yeezy generated over $240 million.
Thus, Yeezy is still 20x smaller than Jordan from a revenue standpoint.
The interesting part is that from a branding standpoint, Yeezy was very close to being as successful as Jordan by 2016.
Yet, by 2019 Jordan became again much more popular than Yeezy.
Thus, manufacturing a success like Jordan, it’s a matter of intersecting branding, distribution, and the ability of the partnership to last long enough to transform the iconic status of that brand into a cash printing machine.
Key takeaways
- Yeezy was a fashion brand that arose from a collaboration between German sportswear company Adidas and entrepreneur and music artist Kanye West.
- Before the demise of the collaboration, Yeezy was a complex asset with the brand 100% owned by West and Adidas responsible for production, marketing, and distribution over a set period.
- After the demise of the collaboration, Adidas owned everything associated with Yeezy products except the brand name itself. This left them in a quandary with unsold inventory and a 250 million euro hit to their profits. In November 2022, Adidas decided to continue to sell Yeezy products with the name and brand removed.
Key Highlights
- Adidas’ Yeezy Branding Dilemma: In November 2022, Adidas made the decision to continue selling products from its Yeezy inventory without the Yeezy name or branding. This decision was made after the collaboration with Kanye West ended, leaving Adidas with unsold inventory and a substantial financial impact.
- Change in Leadership: Bjørn Gulden, the former head of Puma, was appointed as the new CEO of Adidas. He was tasked with addressing the 250 million euros in lost profit and repairing the damage to the Adidas brand resulting from the Yeezy collaboration’s demise.
- Adidas vs. Nike: Adidas and Nike are major competitors in the sportswear industry. In 2022, Adidas generated around €22 billion in revenue, while Nike’s revenue exceeded $46 billion. Nike’s success is attributed to its demand creation strategy, athlete collaborations, and iconic Jordan brand.
- Nike’s Business Model: Nike’s business strategy revolves around creating demand for its products. It invests significantly in athlete collaborations and demand creation efforts, spending billions of dollars to generate consumer interest in its brands.
- Jordan Brand’s Impact: The Jordan brand is a significant contributor to Nike’s revenue. In 2022, the Jordan brand generated over $5 billion in revenue, accounting for more than 10% of Nike’s total revenue.
- Yeezy’s Revenue Comparison: Yeezy, a brand resulting from the collaboration between Kanye West and Adidas, generated over $240 million in revenue by 2022. Despite its success, it remained significantly smaller than the Jordan brand, which generated $5 billion in the same year.
- Branding and Success: Both the Jordan brand and Yeezy showcase the importance of branding, distribution, and long-term partnerships in achieving success. The Jordan brand’s iconic status and lasting appeal contributed to its revenue growth.
- Ownership and Collaboration: Yeezy started as a collaboration between Adidas and Kanye West, with West owning the brand and Adidas handling production, marketing, and distribution. After the collaboration ended, Adidas owned all aspects of Yeezy except the brand name.
- Adidas’ Decision: Faced with unsold inventory and a hit to profits, Adidas chose to continue selling Yeezy products without the brand name. This decision raised questions about the lasting association of the products with Kanye West despite the absence of Yeezy branding.
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