Adidas shareholders filed a class-action lawsuit against the brand, accusing it of failing to warn investors about the antisemitism and "extreme behaviour" exhibited by the rapper formerly known as Kanye West, before their partnership ended last year.
In the lawsuit, filed Friday in a federal court, shareholders allege that Adidas "routinely ignored" his behaviour as early as 2018. They claim that senior executives "ignored serious issues" affecting the Yeezy partnership, namely his antisemitic remarks and troubling public comments about slavery.
In a report from that year, Adidas was "generally alluding" to the risks "rather than stating that the company had actually considered ending the partnership as a result of West's personal behaviour," according to the lawsuit. During that time, Ye said that slavery was a "choice" in a TMZ interview.
The lawsuit said that Adidas was aware of his behaviour and that the company "failed to take meaningful precautionary measures to limit negative financial exposure" if the partnership ended.
The lawsuit doesn't name the rapper, who now goes by Ye. Adidas' Chief Financial Officer Harm Ohlmeyer and former CEO Kasper Rorsted are named as defendants. The suit covers anyone who bought an Adidas share from May 3, 2018 (when Ye made the slavery remark) until 2023.
"We outright reject these unfounded claims and will take all necessary measures to vigorously defend ourselves against them," Adidas said in a comment to CNN.
Adidas ended its almost decade-long partnership in October 2022 after Ye wore a "White Lives Matter" T-shirt in public. The Anti-Defamation League categorizes the phrase as a hate slogan used by White supremacist groups, including the Ku Klux Klan. Days later, Ye said "I can say antisemitic s*** and Adidas cannot drop me" during a podcast taping.
Adidas said that its partnership with Ye ended because it "does not tolerate antisemitism and any other sort of hate speech" and said his comments were "unacceptable, hateful and dangerous." It also said they violated the company's "values of diversity and inclusion, mutual respect and fairness."
The company said in February that it was expected to lose US$1.3 billion in revenue this year because it's unable to sell the designer's Yeezy clothing and shoes. In a statement, Adidas said its financial guidance for 2023 "accounts for the significant adverse impact from not selling the existing stock." If the company can't repurpose any of the remaining Ye clothing, Adidas said that could cost the company $534 million in operating profit this year.
