Can Kanye save the day?
Shares of struggling retailer Gap Inc. soared nearly 40% in early trading after the retailer announced Friday it’s partnering up with Kanye West to design a new ‘Yeezy’ clothing line expected to debut in 2021. The new line of apparel for men, women, and kids will be called Yeezy Gap, with products sold online and in stores next year at “accessible price points,” the company said.
The deal would be a multiyear partnership, but notably won’t include shoes—Yeezy designs sneakers for its $2.9 billion partnership with Adidas AG through 2026. The rapper and designer tweeted about the partnership on Friday with the hashtag #WESTDAYEVER.
“We are excited to welcome Kanye back to the Gap family as a creative visionary, building on the aesthetic and success of his Yeezy brand and together defining a next-level retail partnership,” Mark Breitbard, global head of Gap Brand, said in a statement. West worked at a Gap store as a teenager in Chicago, which, Gap said, “brings the relationship between West and Gap full circle.”
Per the terms of the deal, West’s wholly owned Yeezy will receive royalties and potential equity related to sales targets, the company said. Other financial details were not disclosed.
The high-profile partnership could provide a much-needed boost to the beleaguered retailer, which has long been in decline in the retail space amid concerns about the company’s style and operational challenges.
Gap has struggled this year, as the retailer called off its announced spin-off of the Old Navy brand in January, and reported a poor first quarter in June—with sales down 43% for the quarter and a net loss of $932 million. The company also furloughed 80,000 store workers in March as the coronavirus took a massive hit to the industry amid store closures. The company is also being sued by mall owner Simon Property Group for skipping payments amid the pandemic. Gap’s stock, meanwhile, has traded down roughly 40% for the year.
But based on investors’ reaction Friday, the Kanye-Gap crossover could inject some much-needed energy into the brand. West’s brand Yeezy has been a big performer for Adidas. The brand was on pace to do $1.3 billion in revenue for shoes last year, up 50% from 2018, according to Bank of America. The sneaker side of the brand was recently valued at $2.9 billion, according to Bloomberg.
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