Adidas needs Yeezy-like designs to thrive, but many sneakerheads say they're done with the brand

• In a note, Cowen analysts said Adidas has "a path forward" in selling popular shoes without Yeezy.
• Some sneakerheads will give Adidas' new offerings a chance, while others plan to skip the releases.

There's much debate among sneakerheads about whether an Adidas Yeezy line without the polarizing branding from Ye, formerly known as Kanye West, will draw significant attention.

At least one investment firm believes it will.

In a note this week, analysts from Cowen Inc. wrote Adidas will "have a path forward for distribution if done well," noting that Adidas designers were seemingly responsible for the design of many of the Yeezy line's best-selling silhouettes.

What remains unclear is how and when Adidas will roll out the new product under the incoming CEO Bjørn Gulden, who is joining Adidas from Puma, in January.

"Our checks suggest there is demand for Yeezy-like designs among the sneaker community, despite clear reputational risk, and we expect management to launch new styles without Yeezy branding," Cowen analysts said.

For sneaker collectors, opinions vary on the topic. Some will likely give Adidas' new offerings a chance, while others plan to skip out on the releases — because they side with Ye in his past battles with Adidas, or because of the likelihood that releases won't have any hype attached without Yeezy branding.

Before Adidas cut ties with Ye in October, the rapper and fashion designer was vocal in his criticisms of the company. He accused Adidas of stealing the design of the Yeezy Slide in June to create the Adilette Slide. Adidas ultimately cut ties with him following multiple antisemitic remarks. Wholesale retailers, including Foot Locker, also ceased selling Yeezy products.

Adidas brought in roughly $1.2 billion in revenue through Yeezy in 2022, according to Cowen's note. The sportswear company now expects to save about $300 million in marketing and royalties next year.

Still, there are many questions swirling around the company heading into 2023 with Gulden at the helm.

Like many retailers, including its archrival Nike, Adidas is coping with excess inventory and heavy promotion activity that is hurting margins. Cowen analysts estimated Adidas also has several million units of Yeezy inventory in warehouses. In November, Adidas announced that it is raising €1 billion in debt for the first time since dropping Ye.

China is another concern for Adidas. The company has lost over $1 billion in annual profit in the region since 2019, Cowen analysts said.

"With respect to Adidas, the industry appears to be pleased that former Puma CEO Bjørn Gulden is being brought into the company as its new CEO, as he is a longtime industry participant with great people skills and a deep industry knowledge that can hopefully restart the Adidas engine," Cowen analysts said. "Mr. Gulden will be tasked with defining a new strategy and culture for Adidas along with dealing with the termination of its Yeezy business and suboptimal results in China, historically its highest margin market."