BRAD SMITH: All falls down. Kanye West trying to walk away from his fashion partners Gap and Adidas, accusing the companies of stealing his designs and breaking promises that would help expand his portfolio. The drama is where we find Sozzi’s Take today. Sozz, what is the tea from Ye?
BRIAN SOZZI: Yeah, you best believe if there is drama and if there is retail drama, that’s where you’re gonna find me, yours truly. So I’m gonna lock in on Gap here. Now Gap, more than a year ago, signed Kanye West to this big, splashy 10-year deal. Now, former CEO Sonia Syngal signed that deal. On the day that deal was announced, Gap shares rose 42% under this notion that Kanye West was going to save a dying Gap.
Now, since then, this has been a disastrous deal based on people that I have talked to ever since this deal was enacted. And for a couple of reasons. You know, and I listed them here. First, you know, you’re just got getting– you just have a terrible management team at Gap that is now, of course, currently in place but also beforehand, that don’t even know what to do with Kanye West.
Not even– also unsure how to handle him, how to approach him, and really ultimately bring his vision to life. And it is a good vision. He’s created– made billions of dollars for Adidas. And that terrible management team at Gap has not figured out what in the world to do with Kanye West. And it’s not help them at all.
Next, virtually no promotion. Because of that terrible management, you just don’t see a lot of promotion out there for these Kanye West product– Kanye West products. And you should, because they are some of the most exciting things in this store. A horrifically boring store that is Gap.
Next, no complete look on sale. I think a little bit of this falls on Kanye West. We’ve seen hoodies released. We’ve seen puffer jackets with no zippers. No real pants. No real overall wardrobe where a consumer can go into the store, find this, and leave with a complete outfit and say, hey, you know what? I look like Kanye West. I’m really cool. Let me take myself some photos for Instagram and TikTok.
Next, too much competition. You know, a lot of other retailers have upped their game. So it’s going to be hard for Kanye, I would say, to cut through a lot of that clutter even though he is cool. Big social media presence to cut through that clutter.
And last but not least, you don’t get– not a very exclusive feeling at Yeezy at Adidas. Also locking in on Adidas. Adidas had driven a lot of exclusivity with the sneakers that Kanye West has driven. You just don’t get that sense with what they have done at Gap. So just not a good look.
And now, I think it falls ultimately onto the next CEO of Gap, whoever that might be. Interim CEO Bob Martin, he’s still in there doing his thing. Yeah, and normally a terrible thing. But do they stay with Kanye? This is a long deal. Reportedly, it was worth up to a billion dollars. Now, I don’t think Gap has the money to get out of a deal like this. But still, they cannot continue along the situation where they have Kanye out here attacking this brand.
BRAD SMITH: I have push and pull feelings about Kanye for a range of reasons. But if there’s one thing that I will concede to him is that it’s a disruption of how we think about where and why we are purchasing certain things. And here’s why I say that because number one, there are certain agreements that he had made with the companies to try and have his own physical stores.
However, what we’ve become so accustomed is going into a physical store and saying, we need to buy an entire outfit. When the reality is, most people will go into a store, they might pick out one or two things, and they’ll say, you know, this is what I can afford for right now. He was supposed to be producing product lines that kept most of his products available and for purchase for the average consumer out there, keeping them under $100. He’s been struggling to do that.
He’s also been struggling to come up with a full line that would warrant putting an entire brick and mortar facility in a new location. And so I think that was an issue in some of the negotiations early on is that they didn’t truly understand– I think for both parties, honestly– that in order for the profit and loss to actually make sense, it would need to still cater towards what that traditional retail experience would be like, while at the same time trying to drive exclusivity so much so to the point where you might walk up and just see a whole closet of puffer jackets in one store. Just a puffer jacket store.
BRIAN SOZZI: No, those are– Brad, that’s so on the mark. And then I would say another mistake they made, too, why is he just designing for Gap? If you’re gonna pay somebody a billion dollars over 10 years and your Gap, well, you know what? You also own Old Navy. You also own Banana Republic. I would be keen to try a reinvented workout– work wear– a wear to work outfit from Kanye West from Banana Republic. I would be keen to see if Kanye can get his price points down for a hoodie to $30 for that economically sensitive Old Navy customer. You could have did more here.
But look, here’s my take before we’ll let everyone go here and do their thing, fire away, Kanye West. Look–
BRAD SMITH: There we go.
BRIAN SOZZI: Hell, yeah, Kanye is right to take on Gap.
BRAD SMITH: But you’ve got the regular Gap hoodie.
BRIAN SOZZI: There you say, Brian West right next to Kanye West there. And he’s right, I lean with Kanye here. I think Gap’s management has done a God awful job with handling him. They could have done better. You should be splashing Kanye all over the website. This is the most exciting thing that has happened to your brand in some time. You could have did better but now you have a fractured relationship and it’s probably going to end not very well.
BRAD SMITH: Yeah, there was a report that said $150 million in revenue is what they were expecting to make from Yeezy Gap in 2022. That was great–
BRIAN SOZZI: Oh, that was Yeezy Sozz. Yeezy Sozz.
BRAD SMITH: Yeezy Sozz. Sozz-Ye.
BRIAN SOZZI: Yeah, Sozz-Ye.
BRAD SMITH: All right.