Hip-Hop Mogul and Gap officially end their partnership

The experiment in corporate disruption that was the partnership between Kanye West and Gap is officially over.

Yes, as Mr. West is now known, formally notified Gap via letter on Thursday that he is terminating their agreement involving Yeezy Gap garment citing breach of contract. Instead, Ye is moving forward with plans to open his own stores.

The partnership announced with a drum of publicity in June 2020, had the opportunity to last 10 years and, Gap hoped, generate more than $1 billion in annual sales. Yeezy Gap would include men’s, women’s and children’s clothing and benefit both sides by turning the Gap’s fortunes around by giving it the veneer of cool and giving Ye access to the mass market.

Gap acknowledged that the deal ended in a message to employees.

“While we share a vision to bring high-quality, trend-forward, utilitarian design to all people through unique omni-experiences with Yeezy Gap, how we are working together to deliver that vision is not aligned,” Gap brand president Mark Breitbard wrote. “And we are deciding to terminate the partnership.”

Lawyers for Ye initially 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 Thursday, claiming in a statement that the retailer had “abandoned its contractual obligations.” The announcement, a copy of which was seen by The New York Times, said Gap had failed to sell products in its namesake stores and had not opened stores with the specific purpose of selling Yeezy products. YZY Gap stores should open in the latter half of 2021, the letter said.

“You 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 selling 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 previously reported that Ye notified Gap that he wanted to end the partnership.

Two years ago, when the mall launched its splashy announcement to merge with Ye, the company’s share price had the biggest increase in at least 40 years. Industry insiders were surprised by the partnership between a very corporate entity and a very unincorporated artist. Mickey Drexler, a former Gap CEO, later recounted Yahoo Finance that “it makes no sense, in my opinion.”

At that time, Mr. Breitbard said the retailer was excited to work closely with Ye to “define a next-level retail partnership.”

The deal included an option to renew after five years, with Gap hoping Yeezy Gap would generate $1 billion in annual sales. The company initially said Yeezy Gap merchandise was expected to hit stores in 2021, but the release date kept getting pushed back. Analysts in conversations with Gap executives frequently asked for updates on the clothing line.

In the first 18 months of the deal, only two products were released: a puffer jacket and a sweatshirt. They were only sold online.

Only in May, after Ye enlisted the help of Demna, the eponymous designer of Balenciaga, and the brand’s atelier had a full line of 36 styles, Yeezy Gap developed by Balenciaga, revealed. Those products finally hit stores in July, many of them at higher-than-usual prices for the Gap: hoodies for $240, T-shirts for $140.

Shoppers lined up around a Gap location in Times Square, where clothes were purposefully piled into what looked like trash bags throughout the store.

Whether that would be enough to change the course for Gap was unclear. In its most recent quarter, Gap brand sales fell 10 percent from a year earlier. The Balenciaga Yeezy line is under a different contract and will not be affected by the Yeezy Gap termination.

According to Danielle Tully, another partner at Cadwalader, “Ye is not taking any action on that contract at this time.”

The partnership with Ye is fraying as Gap searches for a permanent CEO. Sonia Syngal, who oversaw the Yeezy Gap deal, left the chain in July. Bob Martin serves as interim CEO.

Ye has also posted statements on Instagram that suggest he is unhappy with his even longer 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 to be very opinionated and to like control, said Staci Jennifer Trager, who leads the fashion law practice at Nixon Peabody, where she is a partner. It can be difficult when working in a partnership.

“Kanye seems to have a very specific vision and a very strong desire to see things a certain way,” Ms. Trager said. “That level of control and desire to control things and execute in that way might not be compatible with working 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 equivalent to uprooting dinner plans.

“Now he can make all the decisions and he can have pasta every single night,” said Mrs. Trager said.

Related Posts