How Kanye West’s Yeezy Deals Dissolved – WWD


2022 has been a tumultuous year for musician and artist Ye, formerly known as Kanye West.

With three major multi-million dollar collaborations gone, his divorce from Kim Kardashian finalized, and repeated controversial remarks, including those that were anti-Semitic, he has come under heavy criticism. was directed.

His deals with Gap, Adidas and Balenciaga have all dissolved in the past three-and-a-half months, significantly impacting the business of the US retailer and the German activewear brand. A 24-time Grammy Award winner, he was banished from the fashion industry as he was no longer seen as a multi-talented entrepreneur who benefited from a variety of products and industries.

Who knows where the bewildered celebrities go from here. Rumor has it that Ye is trying to get back into the design game. Breaking into the big chains is almost impossible at this point. Major retailers such as Foot Locker have canceled orders for his collaboration his designs following the recent controversy.

Regarding the possibility of musicians partnering with another brand or trying to sell directly to consumers, Morningstar equity analyst David Swartz said: At this point, he’s completely toxic. who will work with him? I don’t think anyone wants to do business with someone who praises Adolf Hitler in an interview. “

Models parade at the Adidas Originals Kanye West by Yeezy Season 1 show.

Steve Eichner

Ye’s attorneys for Cadwalader, Wickersham & Taft LLP denied a request for an update on an unresolved legal dispute relating to three joint projects that ended this year.

Wassner Management Group CEO Cole Wassner also doubts a Ye comeback. “It would have been one thing if he came out after all [happened] I apologized. But he’s doubled, tripled, quadrupled as much as he is and still continues on the same path. He is antimatter. He basically changed his name to Kryptonite,” Wasner said. “At this point, it’s poison for any retailer to try to work with him in any way. Any brand that wants to touch him has neo-Nazi baggage at this point.”

The musician, who revealed his bipolar disorder diagnosis in 2016, has faced controversy for years, which intensified this fall. After attending the show, Ye held a surprise show for the YZY season 9 collection in District 8. There he wore a T-shirt imprinted with “White Lives Matter” and described himself as unruly in his opening monologue. I had the model wear a T-shirt with a picture of “White Lives Matter” on it.

He faced a storm of public backlash. The artist responded with a series of attacks aimed at fashion editors, former friends and even luxury mogul Bernard Arnault. , Ye agreed to purchase the social media platform Parler.

Yeezy Gap Engineered by Balenciaga look.

Yeezy Gap Engineered by Balenciaga look.

courtesy

(Despite issuing a joint statement in October about mutually agreeing to a deal, Parler’s parent company, Parlement Technologies, said earlier this month that the parties had parted ways and scrapped that plan.)

Endeavor CEO Ari Emmanuel called on the Grammy-winning business partner to quit him in an op-ed in the Financial Times. CAA later parted ways with the musician, and MRC also put together a documentary about him Vogue, which featured the musician and Kardashian on its April 2014 cover, also publicly distanced itself from the entertainer.

After first addressing the issue of partnership with the Yeezy brand as “under consideration” in early October, Adidas officially revealed its decision to stop working with Ye in late October. The athletic juggernaut has done so as the volatility rises and calls for consumer boycotts. Ending a 10-year partnership has taken a huge financial hit for Adidas. The company says that as a result, he could lose up to 250 million euros in net profit.

Last year, according to Morgan Stanley, Yeezy products brought in nearly $2 billion in sales for Adidas. This represents about 8% of the company’s total revenue.

Morningstar’s Swartz suggested that in the long run, the damage to the brand and the impact on Adidas’ bottom line won’t be as significant as some think. Noting that it will no longer have to pay royalties for , and will likely cut staff to save on other costs, it has the endorsement of other celebrities, including Beyoncé’s Ivy Parkline and Pharrell Williams. can help. Make up for leftovers. Adidas may also sign a new one.

But if last year’s plans were any indication, the Q4 impact on Adidas could be “pretty big,” with 10 of the 65 Adidas Yeezy drops released in that timeframe. “After 2023, they can make up for that to some extent,” Swartz said. “Despite the media attention, this is probably not the biggest issue for Adidas. The biggest problem for them is China, where sales are falling off a cliff,” he said, citing COVID-19, the slave labor issue and the loss of market share to native brands as reasons.

Adidas has clarified that it will no longer work with Ye and will no longer use the Yeezy brand, although some Yeezy designs are expected to appear under the Adidas logo in the coming months. Adidas chief financial officer Harm Ohlmeyer said on the earnings call that the company is the sole owner of all registered design rights to existing products. “We intend to take advantage of these rights in 2023,” he said.

But Tom Nikic, senior vice president of equity research for apparel and footwear at Wedbush Securities, said some of the style’s appeal might not resonate as much, given Yeh’s public statement. The brand’s plans to release the Yeezy design under the Adidas logo may be difficult because of this. “You also run the risk of a public relations problem if you appear to still be selling sneakers co-designed with someone who has made numerous anti-Semitic remarks,” he said.

The father of four and Adidas affairs came to light in a Rolling Stone article late last month, in which more than a dozen former Adidas and Yeezy staffers said the leaves created a toxic environment for those who worked under him in the Adidas Yeezy line. It was made worse by claiming to have created it. Staff said management was aware of the rapper’s actions and reportedly showed him pornographic videos and made anti-Semitic comments at meetings.

Adidas is just one brand that has distanced itself from the controversy. After the musician’s public comments became even more radical, Kering announced in late October that Balenciaga had broken up with Ye and removed images of him walking at the Spring 2023 show from the brand’s website. did. Highlighting the separation, Kering told WWD at the time that he had no plans for future projects involving the artist. He was embroiled in his own controversy.

Even before the backlash against him began, Ye and his lawyers were moving away from Gap. The musician’s attorney reportedly sent Gap executives a notice of breach of contract in mid-August, and the contract was reportedly terminated by mid-September. I have waived my obligations,” he said. That is, he did not sell YZY products in his stores and did not open stores to sell Yeezy products.

After his controversial comments, Gap released a statement in late October saying it was ending its partnership with Yeezy Gap in September, and the former partner’s recent statements and actions further explained why. We also removed Yeezy products from our stores and closed the YeezyGap site at that time.

The split is said to have left Gap with about $102 million worth of unsold merchandise, according to a source familiar with the situation, who asked to remain anonymous. He is said to still have 12,000 units out of his 8,000 of some 73 styles that didn’t sell to major discounters like Burlington, TJ Maxx, City Trends and Ross Stores last month.

Asked last month what happened to all Yeezy inventory, a Gap spokesperson referred to a transcript of the company’s third-quarter earnings call and said, “We have nothing more to share.” The company’s third-quarter earnings call said, “Last year marked the sale of his Yeezy Gap, and this year it won’t be on base, so the Gap brand will face about a 1-point headwind.” It is stated. It’s one of the factors he cited as the reason why fourth-quarter sales could decline in the mid-single digits year-over-year.

Gap also delivered 37.4% gross margin in the third quarter and delivered 470 basis points of deleveraging year-over-year, including 130 basis points of deleveraging related to a $53 million Yeezy Gap impairment charge. I also mentioned that I went





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