Adidas: No Yeezy Way Out to Account for Inventory

Name: Adidas: No Yeezy Way Out to Account for Inventory (English version)
SKU: W48072

Sa-Pyung Sean Shin, Seil Kim

Product #:W48072

Supplier:Ivey/NUS

Discipline:Accounting, Sustainability

Setting:2023

Details:Case (PDF) • 13 pages • 2026-04-27

Subjects:

Finance and investing Leadership and managing people Accounting Management

Industries:

Fabrication and manufacturing

Your Price:

$9.71

Purchase this material with a free Educator Account and enjoy more benefits:

Free Educator Copy
Free Teaching Notes
Build your coursepack
Discounted academic price

In October 2022, Adidas Group faced a significant public relations crisis involving its long-standing partnership with Kanye West, by then legally known as Ye. After terminating the partnership, Adidas was left with a substantial inventory of Ye-designed Yeezy sneakers and uncertainty about how to manage it. At the same time, Adidas was dealing with a shareholder lawsuit, with investors claiming the company failed to adequately disclose the risks associated with its Yeezy business.

Adidas must now consider its options in dealing with the Yeezy inventory, the financial consequences for reporting how it dealt with the inventory, and any obligations it has considering the pending shareholder lawsuit.

Learning Objectives

This case is appropriate for intermediate financial accounting and financial statement analysis courses at the undergraduate and graduate levels, this case study examines key accounting issues related to gross profit margin calculation, inventory measurement, and risk disclosure.

Students will undertake the following:

Analyze wholesale, retail, and direct-to-consumer business models and evaluate their effects on profitability and gross margins.
Explain the accounting treatment and financial statement effect of royalty-based agreements.
Apply the accounting principles governing inventory valuation and disposal.
Assess alternative strategies for managing unsold or impaired inventory.
Evaluate whether a provision or contingent liability should be recognized for pending litigation.
Examine best practices for risk factor disclosure and communication with shareholders in the context of reputational or operational crises.