Break My Soul? Beyonc茅 gives adidas a new headache
By Andrea Felsted
ADIDAS AG and Beyonc茅 are parting ways, according to the Wall Street Journal.
The end of the partnership is the latest blow for the sportswear giant, which was already reeling from its split with disgraced musician Kanye West. Shares in adidas gave up early gains after the report.
No longer having Beyonce鈥檚 Ivy Park collection on its roster takes away a potential route to making up for 鈧1.2 billion ($1.3 billion) of sales that adidas will lose this year as a result of its break from Mr. West, now known as Ye, last autumn. On top of the Ye-shaped hole in its sales and profits, now the company has a Beyonc茅-shaped shortfall too.
Ivy Park had its roots in a collaboration with fashion mogul Philip Green in 2016. However, Beyonc茅 bought Green out in 2018, after the former Topshop owner, racist abuse and bullying. Mr. Green denied the allegations. Less than a year later, the star teamed up with adidas to produce Ivy Park, bridging the divide between fashion and sportswear.
But adidas, grappling with supply-chain problems, the pandemic, and then the dispute with Ye, never made the most of the partnership. You could say it was the best thing adidas never had. The company could not be reached for comment on Tuesday.
Ivy Park sales were tiny, unlike those of Yeezy, the tie-up with Ye, which may have brought in 鈧1.2 billion of sales and 鈧500 million of operating profit this year. Instead, the German company is grappling with a mountain of unsold Yeezy sneakers. It could face a this year if it has to write off all of the Yeezy inventory.
Ivy Park could have been a way to make up for some of the lost Yeezy revenue. For example, adidas could expand the collection and perhaps brought in husband Jay-Z to develop a menswear line. Instead, losing Beyonc茅 takes away another route for adidas to reach a more diverse range of customers.
The retailer does have a partnership with Jerry Lorenzo, the American fashion and sneaker designer who founded the Fear of God label. With a tie-up with New York-listed Italian house Ermenegildo Zegna NV, he brings strong streetwear and fashion credentials. But this will likely take time to build and won鈥檛 be big enough to offset the absence of Yeezy and now Ivy Park.
New adidas Chief Executive Officer Bjorn Gulden said earlier this month that the company had strength in the type of sportswear that helped athletes run faster and train harder. He also said that adidas had struck a raft of collaborations, including with Prada, Moncler, and Kering鈥檚 Gucci and Balenciaga. Perhaps it had even tied itself too closely to designers, he suggested.
But adidas is clearly not connecting with young shoppers, who are turning instead to Nike鈥檚 Air Jordan ranges and to New Balance鈥檚 chunky retro sneakers. The latter just debuted a collection with Prada鈥檚 sister label Miu Miu, currently one of the world鈥檚 hottest brands.
Whether Mr. Guldren goes further down the sports performance route or doubles down on designer lines and raids the adidas archive for a more appealing fashion franchise, he now has to fill the voids left by both Ye and Beyonc茅. The group needs a Renaissance of its own. 鈥 Bloomberg Opinion
