Gap Stock Surges 35% After Deal With Kanye West by Jessy Samuel Ejay
Gap stock surged 35% in early trading on Friday after the clothing giant struck a 10-year partnership with Kanye West and his Yeezy fashion brand.
West will design a "Yeezy Gap" clothing line that will be sold in stores and online next year.
Gap is targeting $1 billion in annual sales from "Yeezy Gap" in five years' time, The New York Times reported .
.The celebrity rapper, music producer, and entrepreneur will design a "Yeezy Gap" line of affordable adult and children's clothing that will be sold in Gap stores and online next year.
The stock-price increase added about $1.3 billion to Gap's market capitalization, lifting it to north of $5 billion as of 9:56 a.m. ET.
However, Gap stock is still down about 20% this year.
Gap, which also owns Old Navy and Banana Republic, is hoping the line will generate $1 billion in annual sales after five years, The New York Times reported . The Gap division as a whole earned $4.6 billion in net sales last year, full-year earnings show .
West already collaborates with Adidas on Yeezy sneakers. Bank of America valued Yeezy's shoe business at $3 billion and expected it to earn $1.3 billion in sales last year, The New York Times said.
Rapper West worked at a Gap store as a teenager and told The Cut in 2015 that he would like to be "the Steve Jobs of the Gap."
West will receive royalties and possible equity tied to the sales performance of Yeezy Gap.
Source: Business Insider