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US Manufacturer Okabashi Lays Off 142 Employees as Yeezy Production Deal Ends

Following Adidas’ Oct. 25 move to cut ties with Kanye West and end its Yeezy business immediately, an Atlanta area manufacturer that has produced the Yeezy Foam Runner style since 2020 is laying off 142 employees.

“Unfortunately, [the situation] means Okabashi has to stop its current production for Adidas. As of right now there are not enough orders to keep all employees busy with work,” Okabashi said in a statement that also reiterated that the company, like Adidas, does not tolerate hate speech.

The layoffs are effective immediately, and Okabashi said the impacted employees — a significant amount of its workforce — will receive severance and extended health-care coverage. “Okabashi is coordinating with local government agencies and manufacturers to provide support and alternative employment opportunities for the impacted team members,” the company said.”

Okabashi, which counts itself among the 1% of remaining domestic shoe manufacturers, will continue production of its own branded products. It is  pursuing other partnership opportunities to leverage its domestic manufacturing capabilities. Okabashi has been making its sandals in a factory in Buford, Ga., since 1984. The company said 58 employees remain on board.

Across fashion and entertainment, nearly all of Ye’s partners have severed ties with him in recent weeks, including CAA, Balenciaga, Gap and MRC Entertainment, and they are all also likely grappling with the repercussions of lost business and revenue. Big footwear retailers such as Foot Locker Inc. also ended their business with Yeezy immediately.

Adidas — which has not yet revealed any layoffs related to the situation — said the move was expected to have a short-term negative impact of up to €250 million on the company’s net income in 2022, given the high seasonality of the fourth quarter.

While Adidas does not break out Yeezy sales numbers, Morningstar analyst David Swartz estimates the brand brings in close to $2 billion a year. Swartz projects overall Adidas revenues to hit $23 billion this year, which would make Yeezy sales represent nearly 10% of the total.

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