The Yeezy dilemma: Can Adidas avert investor concerns after cutting ties with Kanye?

Adidas, the German sportswear giant, faces investor unrest ahead of its annual shareholder meeting on Thursday. Two prominent German investors plan to vote against its management and supervisory boards over their poor performance in 2022.

Although these votes are typically formalities in corporate Germany, investors have recently used them to express their dissatisfaction.

Deka Investment and Union Investment have expressed their frustration with Adidas'repeated crises, including the Yeezy collaboration with rapper and designer Kanye West, which imploded after the performer made a string of anti-Semitic remarks.

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Adidas's supervisory board, chaired by Thomas Rabe, also faces criticism from shareholder proxy service Glass Lewis, which has urgedinvestors to vote against it. Glass Lewis has criticised the company's handling of diversity matters and called for proof of a real change in the company's culture.

The past year has been difficult for Adidas, as earnings fell and personnel problems arose, leading to a 64 percent decline in its shares till November 2022.

Despite these challenges, Adidas hopes to turn things around with the appointment of Bjorn Gulden, who joined the company in January as theCEO. Gulden has already removed two members of Rorsted's management team and is expected to return Adidas to profitabilitywhile improving communication with investors.

Adidas's shares hasgained around 65 percent since November 2022, when Gulden was first floated as a successor to Rorsted.

However, the company is still grappling with the issue of unsold Yeezy shoes, which put it in a predicament after it cut ties with Kanye West over his anti-Semitic comments.

According to a company-compiled consensus, Adidas is set to update investors on the unsold stock on May 5 when it reports first-quarter results, which are expected to show a 4 percent decline in net sales to $5.07 billion.

Adidas is currently engaged in discussions regarding Yeezy footwear, even reaching out to those whom Kanye West's controversial comments have negatively impacted. However, finding a resolution is proving to be a difficult task. Despite Adidas ceasing production, the value of Yeezy shoes in the resale market has skyrocketed, with some models doubling in price.

The company isyet to determine what to do with its unsold inventory. Some voices have suggested that if Adidas decides to sell the shoes, the profits should be donated towards the fight against antisemitism. The American Jewish Committee'sHolly Huffnagleand the Anti-Defamation League have already expressed their readiness to collaborate with Adidas on this matter.