Adidas has found itself navigating through turbulent waters as it reels from the implications of severing ties with the controversial yet influential Hip-Hop artist Ye, formerly known as Kanye West.

The breakup, stemming from Ye’s public anti-Semitic statements, has propelled Adidas into a financial downturn, marking a significant shift in the company’s fortunes and strategy.

In the aftermath of ending its collaboration with Ye, the creator of the highly lucrative Yeezy brand, Adidas faced a rare net loss of $63 million in 2023.

This financial strain was notably influenced by decreased revenue from the Yeezy line, which had been a major driver of sales for the sportswear giant.

In a bid to address the situation, Adidas has initiated the sale of its remaining Yeezy inventory, committing to donate a portion of these proceeds to organizations fighting against hate, including racism and anti-Semitism.

The split’s repercussions extend beyond unsold stock and financial losses. Adidas has observed a decline in its North American market, with sales dropping over 16%.

The feud between Adidas and Kanye West shows no signs of slowing down. Earlier this week, Kanye trashed the German sportswear Giant in an explicit Instagram post.

“This number #1 is for you it’s for the people who won’t be manipulated by the system and f### adidas and everybody who works there or with them Anyone who goes to school with anyone who’s parents work at adidas Just know they tried to destroy me and here we are with the number 1 song in the world Like the fake dude I saw in the lobby at the Ritz that works at Goat,” Ye posted on IG.

Last month, Ye claimed Adidas was suing him for $250 million as well despite selling his old designs, which he instructed fans not to purchase.

“Let me explain really clear to you guys what’s happening with Adidas,” Ye said. “Not only are they putting out fake colorways that are non-approved, they’re suing me for $250 million. And they’re also not paying me for these shoes that they’re putting out that have my name on it. And they’re using contract clauses and 50 years of business to experience to rape an artist, one of y’all’s favorite artists, right in front of y’all in broad daylight.”

This downturn is partly attributed to the company’s strategic reduction in wholesaler sales, an effort aimed at mitigating existing inventory surpluses.

Despite these challenges, Adidas anticipates a further contraction in North American sales by approximately 5% in the coming year.