The Adidas Comeback: From YEEZY Collapse to Record Revenue
In 2022, adidas lost Kanye West. The YEEZY line disappeared overnight. Stock crashed 65% and Greater China revenue dropped 36%. First annual loss since 1992.
Three years later, adidas hit €24.8 billion in revenue. Record high. Gross margin: 51.6%. Operating profit up 54%. Greater China just posted its 12th consecutive quarter of growth.
How do you lose the product that generates 40% of your profit and come back stronger within 3 years?
YEEZY hid three bigger problems
Morgan Stanley's numbers on YEEZY are wild: 4-8% of total revenue, but over 40% of operating profit. For 6 years, adidas let one collaboration carry the entire profit engine. When it ended, the brand discovered it had stopped building anything else.
The product pipeline was empty. The archive was gathering dust. Samba, Gazelle, Spezial, Campus... shoes that built the brand's identity decades ago were sitting in a warehouse untouched.
But YEEZY masked two other failures just as damaging.
DTC addiction. Former CEO Kasper Rørsted pushed adidas toward 50% direct-to-consumer sales by 2025. Wholesale partners got cut. Shelf space at Foot Locker and multi-brand retailers disappeared. Consumers walked into stores and saw New Balance and HOKA where adidas used to be. By the time inventory piled up in adidas's own system, the brand had no wholesale partners left to absorb it. So adidas started discounting on its own website. The same spiral Nike is in right now.
Performance ad addiction. Adidas was spending 77% of its marketing budget on performance ads (clicks and conversions) and only 23% on brand building. Then their own econometric analysis revealed that brand-focused activity drove 65% of sales across all channels. The budget allocation was completely inverted. Adidas was feeding the channel that delivered 35% of results with 77% of the money.
Gulden's fix: do less of everything that was broken
Bjørn Gulden took over as CEO in January 2023. His approach was subtraction.
YEEZY inventory: Gulden released YEEZY stock in controlled online drops over 2 years. The first two rounds in 2023 generated €750 million. Total YEEZY clearance contributed €1.5 billion in revenue. Inventory hit zero by Q4 2024. Brand damage: minimal.
Wholesale: Gulden killed the 50% DTC target and rebuilt wholesale relationships. By 2024, wholesale grew 14%, outpacing DTC at 11%. Foot Locker and Topsports restocked full adidas lines. Shelf space returned. Brand visibility returned with it.
Product pipeline: The archive opened. Samba went from niche to €1.5 billion in annual sales by 2024 (20x growth from 2023). Gazelle, Campus, Spezial, and a dozen other archive shoes followed. Instead of one mega-collaboration carrying all the profit, adidas built a cluster of heritage shoes that share the load. If one cools off, the others hold.
Marketing: Budget rebalanced toward brand building, following the 60/40 split (brand/performance) that Les Binet and Peter Field recommend. More money making people think of three stripes when they want sneakers. The brand slogan shifted too, from the elite-athlete "Impossible is Nothing" to the everyday "You Got This" (你行的).
China is where adidas proved the model
Greater China went from -36% in 2022 to 12 straight quarters of growth. Q1 2026: €1.14 billion, up 17%. Here's how.
Adidas appointed its first Chinese-born managing director for Greater China (萧家乐, Adrian Siu) in late 2022. Then Gulden gave him something most global brands refuse to give their China teams: full autonomy.
95% of products sold in China are now produced locally. Over 60% are designed by a 100-person team at the Shanghai Creative Center (CCS), which went from executing headquarters briefs to running its own product development pipeline. Product development cycles dropped from 13 months to 4-7 months.
The results show up on shelves. The CCS designed a new Chinese-style jacket series (新中式夹克) that became so popular with international tourists that they started reverse-purchasing it to bring home. A Three Stripes pet accessories line, conceived entirely by the Shanghai team, scaled from a local marketing gimmick to a global product line. Gulden said it exceeded headquarters' expectations.
The channel structure in China runs on a four-tier pyramid: 8 flagship brand centers in top-tier malls (brand building, no sales targets), HALO/FOS concept stores co-operated with Topsports, standard franchise stores for national coverage, and 500+ FCC stores with Heilan Home for tier-3/4/5 city penetration. Each tier has a defined job.
The Nike contrast is sitting right there
Nike is centralizing. Cutting wholesale. Pulling online sales back to headquarters control. Firing distributors. Letting Portland run China strategy.
Adidas is decentralizing. Rebuilding wholesale. Giving regional teams creative autonomy. Letting Shanghai design for China.
Nike Greater China: 8 consecutive quarters of decline. Adidas Greater China: 12 consecutive quarters of growth.
Same industry. Same customer. Same market. Opposite playbook. Opposite results.
Steal this
Audit your marketing split before your next budget cycle. If you're spending 70%+ on performance ads in China, you're probably in the same trap adidas was. Performance ads harvest existing demand. Brand ads create new demand. If your Douyin ROAS is great but your brand recall is flat, your budget is inverted.
Give your China team creative authority. Adidas Shanghai went from "localize headquarters designs" to "design products that sell globally." That shift drove 12 quarters of growth. If your China team still gets PSD files from New York with instructions to swap in Chinese copy, you're leaving money on the table.
Build a product cluster, not a product hero. One mega-hit carrying your P&L is a countdown timer. Adidas learned this with YEEZY. Samba + Gazelle + Campus + Spezial share the load. If your China business depends on a single bestseller, start building the backup now.
Match the channel to the tier. Adidas runs 8 brand-building flagships in tier-1 cities and 500+ value stores in tier-5. Different tiers, different products, different price points, different objectives. If your China retail strategy is "one store format everywhere," you're losing at both ends.
Adidas lost the product that made 40% of its profit, posted its first loss in 30 years, and watched China revenue crater 36%. Three years later: record global revenue and 12 straight quarters of China growth.
The fix was doing less of everything that was broken. Most brands would have panicked and done more.
