Gap Inc. (NYSE:GPS), the American clothing and accessories retailer, has severed ties with the artist Kanye West, popularly known as Ye. As per a WSJ report, Ye’s lawyers sent a letter to Gap on Thursday informing them of the intent to end the Yeezy Gap partnership.
Don't Miss our Black Friday Offers:
- Unlock your investing potential with TipRanks Premium - Now At 40% OFF!
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
Following the news, GPS stock closed down 3.6% at $9.00 on September 15.
GAP and West’s Partnership Turns Sour
Ye is of the opinion that the fashion retailer has not adhered to the terms of the deal. The rapper noted that Gap has not lived up to its contract of opening five dedicated retail stores, nor has it launched Yeezy Gap apparel as planned.
As per the contract, Gap had promised to sell 40% of Yeezy Gap products in retail stores but the retailer took time to launch these. The first Yeezy Gap hoodie was launched in the fall of 2021 and was available only on Gap’s website but sold like hot cakes on the first day itself. The launch of Yeezy Gap apparel in brick-and-mortar stores was launched as recently as July 2022 in partnership with Balenciaga.
However, Gap can continue selling current Yeezy Gap apparel until the sell-off period. Also, a new batch of apparel that is expected to hit stores by the fall and holiday season will be available for sale at Gap. These items will be priced below $100.
Gap and Ye entered into a ten-year partnership in 2020. However, the relationship started to turn bitter quite soon. Ye has criticized Gap on several prior occasions through social media portals. The rapper turned fashion designer also alleged that Gap copied his designs without involving him in the design process.
Ye is also facing similar strife in his partnership with German brand Adidas (ADDYY) and has criticized the latter for breach of terms. Meanwhile, Adidas regards Ye as a critical partner, and both parties are in communication to stay on the same page.
Is Gap Stock a Buy, Sell, or Hold?
On TipRanks, GPS stock has a Hold consensus rating based on one Buy, ten Holds, and four Sells. The average Gap price target of $9.33 implies 3.7% upside potential to current levels. Meanwhile, the stock has lost 49.3% so far this year.
Gap is struggling to get apparel off its shelves due to the record high inflation. The rising price may continue to pressure consumers’ purchase decisions towards necessity items only, thus portraying a bleak outlook for relatively premium fashion retailers like Gap.
