Adidas Bets on Expanded Partnership With Kanye West
June 29 2016 - 5:59AM
Dow Jones News
By Sara Germano
A collaboration with Kanye West has brought some buzz back to
Adidas AG in fashion circles. Now, the sportswear company is
betting the rapper also can drive sales of clothes and shoes for
the basketball court or football field.
Adidas is expected to announce Wednesday that it is expanding
its partnership with Mr. West to include performance gear and a new
line of co-branded retail stores. The German company is trying to
boost sales, particularly in the U.S., where it has lagged far
behind rival Nike Inc., by bringing the Grammy winner's designs to
the mass market.
Last year, Adidas introduced apparel and high-end sneakers
designed by Mr. West in limited quantities -- notably $350 gray
suede high-tops called the Yeezy Boost 750 that have been selling
for thousands of dollars on the secondary market. The company
declined to provide sales figures for the Yeezys, though Adidas's
share of the more than $1 billion secondary market jumped from 1%
to 30% since the shoes were introduced in February 2015, according
to market tracker StockX, formerly known as Campless.
It is unclear how well Mr. West's fashion brand will translate
to athletes looking for performance footwear. In an interview, Mr.
West said he hopes to get his sneakers on the feet of players for
the National Basketball Association and the National Football
League, though Adidas added no such plans are in place yet.
"Our industry is so ready for disruption, the same signature
lines have X player, Y player, Z player, so of course we're going
to have Kanye work with our guys to challenge that as well," said
Eric Liedtke, chief marketing officer for Adidas.
Mr. West said he played football, basketball, tennis and
volleyball in high school, but that singing and performing are also
athletic. "I'm not just a musician singing in front of a mic, we
are running, jumping, we're getting hurt," he said. "We're in the
same arenas that the ballplayers play in."
Adidas said it would separate the Adidas + Kanye West line into
its own business unit. It will have dedicated staff based at the
company's U.S. headquarters in Portland, Ore., similar to Nike's
line for basketball star Michael Jordan. Financial terms of the
partnership weren't disclosed.
Locations and opening dates of Adidas + Kanye West retail stores
have yet to be determined, the company said. Mr. West's sportswear
products also are expected to be sold at some existing retail
partners, such as Foot Locker Inc., though specific plans also
weren't yet available.
Until recently, offering a performance line to a nonathlete was
almost unheard of in the sportswear industry, but the rise of
athleisure has upended tradition. Dick's Sporting Goods Inc.
launched a collection of activewear with singer Carrie Underwood,
and actress Kate Hudson started her own Spandex collection,
Fabletics.
Traditional sportswear makers have done limited collaborations
with entertainers, including Nike with actor Kevin Hart and Puma
with singer Rihanna. On recent earnings conference calls, Foot
Locker has pointed to the success of the Rihanna line and other
casual gear, while sales of signature basketball shoes for star
athletes such as LeBron James have slumped.
Adidas sales rose 5% in North America last year, bringing in
about $3 billion, while Nike sold about $15 billion in the region
for the fiscal year ended May 31. The German company has ramped up
spending on U.S. sports endorsements, but most of its success has
been in sales of retro-casual shoes such as Stan Smith and
Superstar sneakers.
Mr. West said part of his rationale for working with Adidas is
to reshape its retail presence. "We have masterminds. working on
e-com [e-commerce], pop-up stores, whatever is the next frontier,
whether that's app purchasing or something else," he said. "I'm
really happy to be in the middle of those conversations. I think I
do have some ability to count cards on where things end up."
Mr. West and Mr. Liedtke said they were both inspired by the
performance of Mr. James, the NBA Finals MVP who brought the
Cleveland Cavaliers their first championship earlier this month,
ending a 52-year title drought for the city. "Even though he's a
Nike guy," Mr. Liedtke said, "I gotta say it's still a great
story."
Write to Sara Germano at sara.germano@wsj.com
(END) Dow Jones Newswires
June 29, 2016 05:44 ET (09:44 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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