Thomas Lyons 
Adidas is facing a class-action lawsuit from investors who allege the company knew about offensive remarks and harmful behaviour from Ye, the rapper formerly known as Kanye West, years before ending its partnership with him. The lawsuit, filed in US District Court in Oregon on Friday, claims that Adidas was aware of the potential harm that Ye’s problematic behaviour could cause the company for some time. The suit represents people who bought Adidas securities between May 3 2018 and February 21 2023 and also alleges that Adidas failed to take precautionary measures to limit financial losses if the Ye partnership were to end.
The suit accuses Adidas, the company’s former chief executive Kasper Rorsted and chief financial officer Harm Ohlmeyer of being aware of or “recklessly” disregarding false or misleading statements surrounding the partnership with Ye, who is not listed as a defendant in the suit. The lawsuit points to earlier incidents, including 2018 comments where Ye suggested slavery was a “choice” and reports of Ye making antisemitic statements in front of Adidas staff. The complaint also points to annual company reports from 2018 through to 2021 which, the suit says, failed to disclose risks related to Adidas’s partnership with Ye.
Adidas cut ties with its star collaborator in late October, following Ye’s antisemitic comments on social media and in interviews. At the time, Adidas said the company “does not tolerate antisemitism and any other sort of hate speech” and called Ye’s remarks and actions “unacceptable, hateful and dangerous”. Weeks before the decision, at Paris Fashion Week, Ye also wore a shirt with a White Lives Matter slogan – which the Anti-Defamation League categorises as a white supremacist phrase that originated as “a racist response to the Black Lives Matter movement”.
Adidas has pushed back on the allegations made in Friday’s suit. “We outright reject these unfounded claims and will take all necessary measures to vigorously defend ourselves against them,” Adidas said on Monday in a statement sent to The Associated Press. The suit seeks unspecified damages, the payment of legal fees and “further relief as the court may deem just and proper”.
During his collaboration with Adidas, Ye designed the widely successful Yeezy line. According to Friday’s suit, by 2019 sales of Yeezy shoes surpassed $1bn. Since cutting ties with Ye, Adidas has lost hundreds of millions of dollars. Ending the partnership cost €600 million in lost sales in the last three months of 2022, helping drive the company to a net loss of €513 million.
The decline, also attributed to higher supply costs and slumping revenue in China, contrasts with profit of €213 million in the fourth quarter of 2021. More losses could be ahead, especially as the company struggles with what to do with the existing Yeezy inventory. In March, the company forecast a €500 million hit to 2023 profit earnings if it decides not to repurpose the remaining Yeezy products in stock. The company also predicted a 2023 operating loss of €700 million.
This lawsuit is a significant challenge for Adidas, as it not only puts the company in a negative light but also highlights the risks of partnering with high-profile individuals. This case also emphasises the importance of companies taking a stand against hate speech and offensive behaviour. Adidas has made it clear that it does not tolerate any form of hate speech, and this lawsuit could be an opportunity for the company to demonstrate its commitment to its values.
In conclusion, Adidas is facing a class-action lawsuit from investors who claim that the company knew about Ye’s problematic behaviour before ending its partnership with him. The lawsuit seeks unspecified damages, the payment of legal fees, and “further relief as the court may deem just and proper.” Adidas has rejected these allegations and will defend itself vigorously. The case highlights the risks of partnering with high-profile individuals and emphasises the importance of taking a stand against hate speech and offensive behaviour. The lawsuit is a significant challenge for Adidas, and its outcome could have far-reaching implications for the company.
