Adidas was sued by investors who claim the company was aware the risks of its partnership with Yeformerly known as Kanye West, years before he cut ties with the rapper.
Investors allege in the trialfiled Friday in federal court in Oregon that Adidas was aware of Ye’s problematic behavior and failed to take precautionary measures to limit financial losses should the partnership end.
The German sportswear giant ended its partnership with Ye in October following the creator’s anti-Semitic remarks on social networks and in interviews. The company called Ye’s comments “unacceptable, hateful and dangerous” at the time.
According to the complaint, which quotes a Wall Street Journal reportAdidas executives discussed the risks of continuing his collaboration with Ye as early as 2018.
Investors say a 2018 annual report ‘ignored serious issues’ with the partnership and potential risk to shareholders by ‘generally alluding to ‘risks’ rather than stating that the company had actually considered ending the partnership because of West’s personal behavior.”
The company also failed to disclose that Ye made anti-Semitic remarks in front of Adidas staff, according to the lawsuit.
“We categorically reject these unsubstantiated claims and will take all necessary steps to vigorously defend against them,” Claudia Lange, vice president of external communications at Adidas, said Sunday.
The lawsuit, which seeks to represent investors who bought Adidas securities between May 3, 2018 and February 21, does not name Ye as a defendant.
Why did Adidas stop selling Yeezys?
Adidas ended the lucrative deal with Yeezy last year over Ye’s anti-Semitic remarks, facing pressure to cut ties with the musician.
Since then, the company bled millions of dollars as Yeezy products become unsold. The company forecasts a decline in profits of about $535 million and an operating loss of nearly $750 million in 2023 if it decides do not reuse existing Yeezy inventory.