By Gary J. Nix
- The Gap looks to Kanye West to help reverse $994M loss in 2020
- In 2023, The Gap & Banana Republic are shuttering 30% of stores
The Gap (GPS +1.77%) announced turnaround plans to refocus efforts on fast-growing brands and ecommerce. As part of their efforts to address this, they’re hoping a 10-year partnership with Kanye West can revive the beleaguered fashion brand. They forecast this deal will yield $1 billion in sales over time, and to help reverse the $994 million loss it sustained in 2020. This may prove to be a tough mountain to climb since it has failed to attract Black millennials who drive fashion trends today.
Why This Matters: Herein lies the problem, The Gap’s popularity among the young and fashionable has waned, even though they’ve tried to use millennials like Sza, Janelle Monae and Metro Boomin in ads to revive sales and appease investors. Shares are down more than 20% in the past two years. However, we’ve seen this strategy before, aligning a brand with a celebrity to increase cultural relevance and help define it for certain audiences. It’s worked time and time again, just not recently for a company that used to be the coolest brand in retail, with its logoed sweatshirts and signature denim. As a matter of fact, the Adidas (ADDYY +3.79%) and Kanye West YEEZY footwear partnership has grown into a $1.5 billion business to-date and The Gap is hoping that lightning strikes twice with the rapper.
The Adidas x Kanye West YEEZY footwear partnership has grown into a $1.5B business to-date
The Gap is making big bets on Athleta that recently inked a sponsorship deal with the most decorated woman in U.S. track and field history, Allyson Felix. It wants to prioritize its Lululemon competitor, even though Athleta is responsible for only 10% of Gap’s $16 billion revenue. The company plans to open 100 new Athleta stores over the next few years. Meaning, Felix’s partnership with Athleta may prove to be more profitable in this work-from-home environment, than West’s deal with The Gap.
What’s Next: Questions remain as to how this Yeezy Gap collection will perform once released in 2021. West’s creative idea executions are sometimes concerning, and his cultural cache has taken hits due to vocal endorsements for Donald Trump. Additionally, how West reacts to the 2020 presidential election may skew how people adopt this fashion line. It will be interesting to see how Mr. West’s outspoken personality affects sales, but as of now, we can only wait and see.
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