Lack of Yeezys Will Benefit Nike This Holiday Season, Analyst Says

This holiday season, Nike is poised to capture more demand than usual.

That’s partly thanks to the lack of Yeezy product expected in the marketplace through December.

Adidas cut ties with Kanye “Ye” West in late October after the designer made repeated antisemitic comments. The sneaker giant halted production on one of its most successful shoe partnerships and scrapped its upcoming releases, prompting a revenue loss for Adidas of about 500 million euros.

Simultaneously, major retailers including Foot Locker and Hibbett Sports began pulling product from shelves and cancelling future orders.

Yeezy sales have typically peaked in December. As Wedbush analyst Tom Nikic pointed out in a Monday note, there were 10 Yeezy launches in December of last year, out of about 65 total launches over the year, “demonstrating how concentrated the brand had become to December.”

The brand’s absence from the marketplace this year leaves its former market share up for grabs, with Nike emerging as the most likely brand to win it over.

“With no Yeezys for sneakerheads to buy this year, Nike stands to be a key beneficiary,” Nikic said.

Throughout December, Nikic expects to see 26 high heat launches from Nike, similar to last year. The lack of competition from the Yeezy brand will likely prompt stronger demand for these releases, as well as lower-tiered Nike products as well. There are currently eight Jordan launches and three Nike Dunk debuts planned for December, Nikic said.

This demand boost will be a major tailwind for Nike, which reported a 22% decrease in net income of $1.5 billion in the first fiscal quarter of 2023 due to elevated freight and logistics costs and a highly competitive promotional environment. Nike is set to report earnings for the second quarter on Dec. 20.

Meanwhile, Adidas has indicated a plan to continue to produce Yeezy products and colorways without the Yeezy name. The company has also begun shifting its attention to other collaborations to mitigate the loss of Yeezy, which was worth an estimated 10% of Adidas’ total revenues.

But according to Nikic, “the lack of Yeezys this year is simply too much for them to overcome.”

Despite holiday headwinds, Adidas is banking on a longer-term plan to get back on track, which includes a new CEO — former Puma chief Bjørn Gulden — to help it overcome current obstacles.

Even before Bjorn’s appointment was confirmed, analysts were upbeat about the new hire’s potential to guide Adidas’ business as it grapples with challenges. In the third quarter, Adidas reported a 4% growth in currency-neutral sales. Net income from continuing operations was 66 million euros, reflecting 300 million euros in one-off costs that negatively impacted business in Q3.

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