Adidas over-ordered during the pandemic — then demand vanished and inventory piled up

During the COVID-19 pandemic, Adidas experienced a surge in demand as consumers shifted spending to athleisure and home fitness. The company responded by ramping up production and ordering aggressively from its supply chain partners in Asia. By 2022, however, the post-pandemic demand shift back to services and experiences left Adidas with a severe inventory overhang. Warehouses were full of unsold apparel and footwear that had been ordered when demand was at its peak.

The inventory crisis was compounded by the termination of the Yeezy partnership with Kanye West in October 2022, which left Adidas with €1.2 billion in unsellable Yeezy inventory. But the broader problem was structural: Adidas had built a supply chain optimized for growth that could not quickly adjust when demand softened. The company was forced into heavy discounting to clear inventory, which eroded brand equity and compressed margins. Gross margin fell from 52% in 2021 to 47% in 2022.

CEO Kasper Rorsted, who had led the company since 2016, announced his departure in August 2022. Björn Gulden took over in January 2023 and began a turnaround focused on reducing inventory, simplifying the product range, and rebuilding the brand’s relationship with retailers. Adidas reported a net loss of €119 million for 2023, its first loss in decades, as the inventory cleanup continued.