Kanye West’s Yeezy and Gap launched their collaboration Tuesday, celebrating the rapper, designer and aspiring politician’s 44th birthday by opening preorders for a $200 blue puffer made from recycled nylon.
The sudden introduction added a little more buzz to what was already one of the most closely watched collaborations of the summer.
And the marketing push has now begun. Floating projections of the Yeezy Gap round jacket can be viewed in New York, Los Angeles and Chicago, including the New Museum and 142 Spring Street in New York; the Grammy Museum, Vine Street — Walk of Fame and Grand Central Market in Los Angeles, and several locations in Chicago, including 2053 Division Street.
Last June, news that West was working with Gap on a line of basics at “accessible price points” pushed the retailer’s stock up nearly 19 percent to $12.07 in a day. The stock continued to rise as the outlook for retail improved over the course of the pandemic and Gap rose another 2.9 percent to $32.25 on Tuesday with the collaboration under way.
The Wall Street gains are good news for both the retailer and West.
When their partnership began, Gap issued Yeezy Supply warrants to buy up to 8.5 million of the company’s stock, or a 2.3 percent stake, with the warrants vesting as the line hits certain sales target. (Annual sales would have to hit $700 million to unlock all the warrants.)
If Yeezy were to exercise the warrants, it would buy half of the stock at $10.16 (where Gap was trading at last summer) and the other half at $25. At current prices, Yeezy and West would make out in both cases.
While teaming with Gap expands West’s horizons, the partnership could be more important for the retailer.
The introduction of Yeezy is just one of the big changes underway at Gap, which has trimmed it store base and is viewing itself as more of a brand than a retailer. (To wit, it is also launching home products with Walmart, extending both its name and its distribution footprint.)
But West brings a certain kind of design cool to the brand — something Gap is working hard to regain, having gone from red-hot in the ’90s to one of the many specialty names fighting for market share with lower prices in the Aughts.
“This is likely going to be a pretty compelling launch, which would make it far and away the most compelling thing Gap has done since there was colored denim a decade ago,” said Ike Boruchow, retail stock analyst at Wells Fargo.
Boruchow noted that West and Yeezy helped boost Adidas, extending a “brand halo” over the business during their collaboration, and that Gap seems to be looking to build the line into a bigger business.
And the launch comes at a time when investors are looking at Old Navy and Athleta as the drivers of Gap Inc.
“Wall Street perceives Gap [the division] to have little to no value,” Boruchow said. “So if you think about that part of the business having one of the most exciting catalysts coming that maybe I’ve seen in my career covering [the company], I think that’s a pretty big deal.”
Gap Inc. chief executive officer Sonia Syngal sketched out the brand’s evolution to investors at Deutsche Bank’s virtual Access Global Consumer conference this week.
“I’ve always said the Gap is one of the most iconic brands in the world and arguably the most iconic American apparel brands,” Syngal said. “And yet we have lost our obsession about creative and cool.”
That last 16 months has been about regaining the mojo.
“We’ve seen that North America is growing, it’s healthy and it’s cool,” the CEO said. “And what that lets us do now is export that brand around the world. We sell in over 50 countries. Gap is globally recognized. And so that is the opportunity for Gap.
“The brand is the asset,” she said. “And we’re going to come up with new and relevant ways through partnerships as well to amplify the reach of the brand. And so when you think about the Walmart deal, which is about expanding Gap authority into lifestyle brands through the home collection, or the Yeezy Gap collaboration… those are a couple of examples of how we’re breathing a lot of life into Gap. And we’re seeing the customers respond.”
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