Adidas are failing to hit the mark on many levels. It is estimated to have a substantial full-year loss of €700m in 2023, its first annual loss in 31 years!
To add fuel to the fire, it has also just terminated its partnership with Beyonce, citing poor commercial performance as the root cause.
The brand can’t catch a break, as this marks the second high-profile celeb termination, as they recently ousted Kayne West. These are not isolated examples, as Adidas has shown lacklustre performance across the influencer partnerships they have worked with, including Bad Bunny and Pharell Williams.
Beyoncé bows out
Once pipped as the next big thing, Adidas certainly had high hopes for the Beyoncé partnership.
They projected sales for Ivy Park (Beyoncé’s brand) to hit $250 million in 2022.
The reality wasn’t even close, where it fell more than 50% to just $40 million in 2022, hugely off from the $93 million in 2021.
So there is trouble in the broncs, with investors unlikely to see a return on this deal.
Kayne stock sticks to the warehouse
To make matters worse for the apparel brand, they are said to have over $750 million in Ye (Kayne’s brand) inventory that they can’t sell.
The accumulative pressure from all these deals going south has put Adidas into a spiral.
This is a classic tale of getting swayed by the influencer revolution. In doing so, they moved away from their core proposition and into more mainstream fashion.
This has been widely cited as being at the heart of their problem. Heavy-weight influencers often play a huge role in the designs and apparel, which would have taken them further from their sporting roots.
Importantly, it’s not the influencer strategy per se that has led to their demise but rather how it was executed.
Contrasting their approach to their rival Nike, we can see a stark difference. Nike has too partnered with many household names. But the key difference is that they stuck to their core area and only partnered with athletes.
So the lesson for Adidas as they move forward is to re-ignite what gave them fame while adopting a more cautious approach to mainstream influencers.
It’s easy for even the biggest companies to be taken in by huge followings and the prospect of access to loyal fans and new audiences. However, the reality does not always live up to the expectation. Not to mention the potential perils of taking on influencers that incur huge reputational damage themselves. It can cost a brand big time commercially and reputationally.