Beyoncé gives Adidas new headache
Adidas and Beyoncé are parting ways, according to the Wall Street Journal.
The end of the partnership is the latest blow to 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 Beyoncé’s Ivy Park collection on its roster takes away a potential route to making up for €1.2bn of sales that Adidas will lose this year as a result of its break from West, now known as Ye, last autumn. On top of the Ye-shaped hole in its sales and profits, now the company has a Beyoncé-shaped shortfall too.
Ivy Park had its roots in a collaboration with fashion mogul Philip Green in 2016. However, Beyoncé bought Green out in 2018, after the former Topshop owner faced accusations of sexual harassment, racist abuse and bullying. 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 €1.2bn of sales and €500m of operating profit this year. Instead, the German company is grappling with a mountain of unsold Yeezy sneakers. It could face a €700m operating loss 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 have expanded the collection and perhaps brought in husband Jay-Z to develop a men’s wear line. Instead, losing Beyoncé takes away another route for Adidas to reach a wider 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, he brings strong streetwear and fashion credentials. But this will probably take time to build and will not be big enough to offset the absence of Yeezy and now Ivy Park.
New Adidas CEO 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’s 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’s Air Jordan ranges and to New Balance’s chunky retro sneakers. The latter just debuted a collection with Prada’s sister label Miu Miu, currently one of the world’s hottest brands.
Whether 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 Beyoncé. The group needs a Renaissance of its own.