Gap Stock Soars 32% on 10-Year Deal with Kanye West
The Gap Inc. (NYSE: GPS) saw its shares skyrocket 32% on news of striking a deal with Kanye West and his YEEZY brand.
Under the deal, the rapper will design a new set of YEEZY apparel for men, women, and children for Gap, the clothing retailer said in a statement today. According to The New York Times, the partnership is to last 10 years and Gap hopes to generate $1 billion in annual sales.
Kanye West also has a deal with Adidas (OTC: ADDDF) to sell Yeezy sneakers. While the partnership between Gap and West won't include footwear, the Yeezy brand was valued at $2.9 billion in April 2020, according to Gap.
The move brings West back to the start of his career - the rapper had worked at a Gap store in Chicago as a teenager. In 2015, West told Style.com when there was a creative director position opening at the company that he would like to be the "Steve Jobs of Gap."
"We are excited to welcome Kanye back to the Gap family as a creative visionary, building on the aesthetic and success of his YEEZY brand and together defining a next-level retail partnership," Mark Breitbard, the Global Head of Gap Brand, said in a statement today.
In some other good news for Gap, consumer spending surged 8.2% in May.
Now, Gap will look to turn around its struggles amid the coronavirus crisis. In the first quarter, net sales for Gap Global were down 50% year-over-year. As of Thursday's close, shares in Gap were down nearly 43% year-to-date.
In other news, the San Francisco-based company is being sued by Simon Property Group for failing to pay more than $65.9 million in rent and other charges during the pandemic. As of May 2, Gap had $1.1 billion in cash, cash equivalents, and short-term investments.
The Yeezy Gap brand is expected to hit the company's stores in 2021. Hopefully, for the clothing retailer, that will be a "Welcome to the good life."