Adidas and Beyoncé’s sportswear brand Ivy Park have been working together for five years.
The collections have been highly rated and received positive feedback on forums. However, this collaboration is about to come to an end…
Ivy Park is a brand launched by Beyoncé in 2016. In 2019, the sportswear duo had their first collaboration
with a series of famous stars such as Missy Elliott, Cardi B, Kendall Jenner, Angela Bassett, Ciara, Reese Witherspoon and Hailey Bieber…
Beyoncé also let her beloved daughter Blue Ivy Carter – then 9 years old, model for the Adidas x Ivy Park promotional campaign in 2021.
In February this year, the Wall Street Journal reported that Ivy Park recorded sales in 2022 that were $200 million lower than internal forecasts.
Accordingly, Ivy Park’s sales in 2022 decreased from $93 million in 2021 to approximately $40 million, lower than the forecast of $250 million.
However, Beyoncé will still receive $20 million/year under the contract with Adidas.
Adidas x Ivy Park’s collaborative products are loved for blending feminine, independent styles into popular products such as shoes, leggings, hoodies, jumpsuits… but there are also products that create their own mark with eye-catching designs and good fabrics. These products only have 4 fixed colors: burgundy, yellow, beige and burnt orange, all of which are hot colors but combine very harmoniously together.
The contract between Ivy Park and Adidas is valid until the end of 2023. According to sources shared with the Wall Street Journal, Adidas’ board of directors seems to be considering ending the contract earlier than expected. The split was reportedly due to “significant creative differences” between Ivy Park and Adidas, prompting Beyoncé to venture out on her own to maintain complete creative control of the brand.
But in reality, it was the revenue that was the issue, with analysts saying that the partnership between Adidas and Ivy Park caused huge financial losses for both parties. Expecting similar success to Kanye West’s Yeezy shoe brand, Adidas and Beyoncé’s team disagreed on how to promote it. The Grammy-winning singer, although appearing in commercials, rarely wore the brand’s clothing when she appeared on camera.
In 2022, Adidas was hit hard when it ended its partnership with Kanye West, after the rapper was widely boycotted for posting anti-Semitic insults on social media. The split has led to a number of copyright issues, as Adidas holds the majority of design patents for Yeezy sneakers, but the brand is owned by Mascotte Holdings, Kanye West’s company. Adidas’ new CEO, Bjørn Gulden, said in February 2023 that the mountain of unsold Yeezy shoes could cost the brand up to €700 million ($750 million).
So Adidas hoped to replicate Yeezy’s success by focusing on a collaboration with Beyoncé’s Ivy Park. However, sales have been disappointing, with half of the merchandise unsold. For 2023, documents show projected revenue of $65 million, well below Adidas’ previous target of $335 million. Adidas’s market capitalization is now just €25 billion – one-seventh that of Nike – and investors are turning to their German rival Puma. According to The Economist, Adidas’ sales were flat in the final quarter of 2022 compared to the same period in 2021 and the company also reported a loss of €724 million. Meanwhile, Nike reported quarterly revenue of $12 billion – 14% higher than the same period last year and double Adidas’ thanks to its Air Force shoes, which had a surplus of up to 15%.
Currently, Adidas’ board has high expectations for Bjørn Gulden. His first task will be to decide what to do with the Yeezy inventory. In the long term, the task of doing business in the Chinese market is a difficult problem. Last year, revenue from this market dropped 36% due to strict lockdowns and consumer boycotts of Western brands. This is a huge number compared to Nike’s 8% decrease.
Some sources say Adidas has reached an agreement with Kanye West to sell Yeezy models without the rapper’s brand logo. Some other market analysts believe that Mr. Bjørn Gulden may sell the entire current Yeezy line to raise money for charity; both to solve the inventory problem and bring good reputation to the brand. However, Adidas has not confirmed any solution.
Meanwhile, in early 2023, Nike has continuously launched a series of trendy sneakers that have caused a stir. Most recently, the effect of Nike’s collaboration with Tiffany & Co. After going on sale on March 3, it was sold out and immediately resold at 2-3 times the original price. Also from Germany, Puma quickly launched a handshake with g TikTok star Dixie D’Amelio, the Final Fantasy XIV game series…
In addition, Puma also confirmed that it has renewed its contract with Rihanna’s Fenty brand. When the Puma x Fenty line first launched in February 2016, the designs quickly sold out. In addition, Rihanna’s name has also helped increase public interest in Puma in general; a report from Paper magazine shows that Puma’s revenue reached the $1 billion mark when it collaborated with the singer from the Barbados islands.
Adidas’ pressing problem is that it currently has no long-term collaborations that are heavy enough to overwhelm Nike and Puma, aside from a still-nascent project with Latin superstar Bad Bunny. “I promise Adidas will shine brighter, but we need some time to do that,” said Bjørn Gulden.
Mr. Gulden himself was the CEO of Puma and successfully grew the company’s sales, collaborating with many big names such as Jay Z, Rihanna… Thanks to those successes, Gulden was invited to become the new leader of Adidas to revive this famous sports brand.
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Source: USA Today
