A group of shareholders is suing adidas AG, alleging that the sportswear giant failed to warn investors about its knowledge of Kanye West’s antisemitic remarks and “extreme behaviour.”
The proposed class-action lawsuit was filed in US District Court in Oregon on 28 April 2023.
The lawsuit claims that Adidas’ former CEO Kasper Rorsted and its chief financial officer Harm Ohlmeyer disseminated false and misleading statements about the company’s relationship with Mr. West, who legally has changed his name to Ye.
The lawsuit alleges that Adidas failed to disclose that Mr West made antisemitic comments in front of Adidas staff and suggested naming an album after Adolf Hitler.
According to a Wall Street Journal report, the defendants failed to take meaningful measures to limit negative financial exposure if the partnership ended due to West’s behaviour. Adidas terminated its Yeezy deal with Mr West in 2022 after he made several public antisemitic remarks.
Adidas rejects claims; lawsuit seeks unspecified damages
An Adidas spokesman said the company rejected the claims in the lawsuit and “will take all necessary measures to vigorously defend ourselves against them.”
The lawsuit is seeking unspecified damages. Mr Rorsted and Mr West couldn’t be reached for comment.
Adidas focused more on basketball and soccer to Jump-start sales
The end of Adidas’s collaboration with Mr West hurt its results in 2022. Analysts estimated the Yeezy deal accounted for about 8% of the company’s annual revenue. The German-based sportswear brand has since focused more on basketball and soccer to jump-start sales following the demise of the Yeezy collaboration.
Adidas failed to address concerns related to Mr West in annual reports
The lawsuit said that Adidas had similar language in its annual reports from 2019 through 2021 without failing to address concerns related to Mr West.
In its 2018 annual report, the lawsuit said: “The company extolled its commitment to having an equitable workplace, and its strategic workforce management process”.
But it said it failed “to discuss how it routinely ignored extreme behaviour from Kanye West.”
Adidas’s rejection of the lawsuit’s claims sets the stage for what could be a protracted legal battle. The plaintiffs in the lawsuit will have to prove that Adidas failed to disclose material information to investors and that this caused them to suffer financial losses.
Adidas shareholders who bought shares between August 2017 and January 2021 are eligible to join the proposed class action.
Kanye West’s star power
Adidas’s Yeezy deal with Mr West accounted for about 8% of the company’s annual revenue. After he made several public antisemitic remarks, Adidas terminated its Yeezy deal with Mr West last year.