Gap Market Cap Increases By $1.5 Billion, Hours After Announcing Kanye West Partnership

Never let it be said that Kanye west does not yet have influence and power in the fashion world. The rapper-turned-designer recently proved this in a big way by announcing a 10-year agreement with the fashion retailer Gap which will first lead to a new Yeezy clothing line for men, women and children, an agreement whose announcement even increased Gap’s stock by about $ 1.5 billion in total market value at its peak on the first day.

The announcement could not have come at a better time from Gap’s point of view, as they, like virtually all other retailers, are struggling because of the coronavirus pandemic. CNBC reports that the partnership between West and the retailer is underway before the virus is a known problem.

In a press release, the new Yeezy line by Kanye and Gap will consist of accessible prices and “modern basics” available, “which both sounded good to investors, because at its peak on the first day of the announcement, the total of Gap market capitalization had seen an increase of $ 1.5 billion, closing the day with an increase of more than $ 700 million – in layman’s terms, the question was not whether the announcement was excellent for the Gap’s stock market fortune, but exactly how much, a question that will continue to be answered in the coming months before the start of the new line next year.

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The precise financial terms of the agreement between West and Gap are not known, but the press release announcing the collaboration specifically describes West as the sole owner of Yeezy Supply, which means that he should not have given up ownership of its brand to facilitate agreement. Yeezy Supply will of course get royalties on sales of new products, and a recent SEC filing reveals that up to 8.5 million Gap shares would be granted to Kanye’s company based on certain annual sales benchmarks : $ 250 million for a third of the stock, $ 450 million for the second third and $ 700 million for the last third. 8.5 million shares of Gap represent a two percent stake, and that which would be worth about $ 100 million today, and if the fortune of the store continues to increase thanks to the collaboration of Kanye, it is not known not how much the deal could be worth when all is said and done.

Some might be surprised to see Kanye West sign such an important deal with Gap, but in fact this is not the first time that the rapper and the retailer have worked together: as longtime Kanye fans already know, he has worked in a Gap store as a teenager in Chicago.

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