Gap and Kanye West Officially End Partnership
The experiment in corporate disruption that was the partnership between Kanye West and Gap is officially over.
Ye, as Mr. West is now known, formally notified Gap via a letter on Thursday that he was terminating their agreement involving the Yeezy Gap apparel line, citing breach of contract. Instead, Ye is moving ahead with plans to open his own stores.
The partnership, announced with a drumroll of publicity in June 2020, had the possibility of lasting 10 years and, Gap hoped, generating more than $1 billion in annual sales. Yeezy Gap would encompass men’s, women’s and children’s wear and benefit both sides, turning around the fortunes of the Gap by giving it the veneer of cool and giving Ye access to the mass market.
Gap acknowledged that the agreement was ending in a message to employees.
“While we share a vision of bringing high-quality, trend-forward, utilitarian design to all people through unique omni experiences with Yeezy Gap, how we work together to deliver this vision is not aligned,” the Gap brand president, Mark Breitbard, wrote. “And we are deciding to wind down the partnership.”
Lawyers for Ye originally sent a breach-of-contract notice to Gap on Aug. 16. Gap responded with a letter on Aug. 23, but according to Ye’s lawyer, Nicholas Gravante Jr., “Gap left him no choice but to terminate their agreement.”
He did so on Thursday, arguing in a notice that the retailer had “abandoned its contractual obligations.” The notice, a copy of which was viewed by The New York Times, said Gap had failed to sell products in its namesake stores and had not opened stores for the specific purpose of selling Yeezy products. YZY Gap stores were supposed to open in the latter half of 2021, the letter said.
“Ye had diligently tried to work through these issues with Gap both directly and through counsel,” Mr. Gravante, co-head of global litigation at Cadwalader, Wickersham & Taft, said.
He added that Ye would “promptly move forward to make up for lost time by opening Yeezy retail stores.”
Gap plans to continue to sell new Yeezy Gap products that have already been created, including a collection for the holiday season, through the first half of next year.
The Wall Street Journal earlier reported on Ye’s notifying Gap that he wanted to end the partnership.
Two years ago, when the mall stalwart rolled out its splashy announcement about teaming up with Ye, the company’s stock price had its biggest uptick in at least 40 years. Industry insiders were surprised at the partnership between a very corporate entity and a very uncorporate artist. Mickey Drexler, a former chief executive of Gap, later told Yahoo Finance that “it doesn’t make any sense, in my opinion.”
At the time, Mr. Breitbard said the retailer was excited to work closely with Ye in “defining a next-level retail partnership.”
The deal included an option to renew after five years, at which point Gap was hoping that Yeezy Gap would be generating $1 billion in annual sales. The company originally said Yeezy Gap merchandise was expected to appear in stores in 2021, but the release date kept being pushed back. Analysts on calls with Gap executives often asked for updates on the apparel line.
In the first 18 months of the deal, only two products were released: a puffer jacket and a sweatshirt. They were sold online only.
Not until May, after Ye enlisted the help of Demna, the single-named designer of Balenciaga, and that brand’s ateliers was a full line of 36 styles, Yeezy Gap Engineered by Balenciaga, unveiled. Those products finally reached stores in July, many of them at higher prices than usual for the Gap: hoodies for $240, T-shirts for $140.
Shoppers had lined up around a Gap location in Times Square, where the clothes were purposefully piled in what looked like garbage bin bags throughout the store.
Whether it would be enough to change the trajectory of the Gap was unclear. In its most recent quarter, Gap brand sales fell 10 percent from the year before. The Balenciaga Yeezy line is governed by a different contract and will not be affected by the Yeezy Gap termination notice.
According to Danielle Tully, another partner at Cadwalader, Ye is “not taking any action in respect to that contract at this time.”
The partnership with Ye is rupturing as Gap is searching for a permanent chief executive. Sonia Syngal, who oversaw the Yeezy Gap deal, left the chain in July. Bob Martin is serving as interim chief executive.
Ye has also posted statements on Instagram suggesting he is unhappy with his even longer-term relationship with Adidas. In 2020, the partnership brought in nearly $1.7 billion in revenue, according to Bloomberg. It is set to expire in 2026.
Ye is known for being very opinionated and liking control, said Staci Jennifer Trager, who leads the fashion law practice at Nixon Peabody, where she is a partner. That can be difficult when working in a partnership.
“Kanye seems to have a very specific vision and a very strong desire to see things in a certain way,” Ms. Trager said. “That level of control and desire to control things and execute in that way may not be aligned with collaborating with a brand.”
These brand partnerships are like a marriage, she said. Couples have to compromise on which restaurant they go to, even if one of them doesn’t like the cuisine. Ye’s move was the equivalent of ripping up the dinner plans.
“Now he can make all of the decisions, and he can have pasta every single night,” Ms. Trager said.