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Why YEEZY might not be enough to save Gap

Gap’s (GPS) new partnership with Kanye West’s YEEZY brand could infuse “hype and publicity” into the struggling clothing retailer, but it may not be enough to woo new customers long term, say BofA analysts.

“If successful, we expect an initial sales lift from the launch but we remain skeptical this bounce alone will be enough to attract and more importantly keep a younger demographic of Gap customers longer term,” wrote the analysts, reiterating the firm’s Underperform rating.

The YEEZY Gap line launching next year is seen as a way of reinvigorating the brand. The stock surged 15% the day the partnership was announced.

However BofA highlights many variables about the collaboration are still unknown.

“While this will bring newness, we have doubts around the impact's duration and see an elevated risk of distractions from the partnership (i.e. West recently tweeted he is running for President),” wrote the analysts.

YEEZY already has a partnership with German sneakers and apparel maker Adidas (ADDYY), which the analysts note may become “diluted” given the new YEEZY Gap deal.

Adidas faces “brand risk as it effectively shares the YEEZY brand with Gap, an association we do not believe Adidas necessarily would chose,” said the note. “There is risk Adidas' own YEEZY franchise is diluted.”

FILE - In this Nov. 6, 2019, file photo, Kanye West attends the WSJ. Magazine 2019 Innovator Awards at the Museum of Modern Art in New York.  The rap superstar will design adult and kids' clothing that will be sold at Gap in 2021. Yeezy is best known for pricey sneakers that sell out online quickly. But Yeezy footwear, made with sneaker company Adidas, won't be sold at Gap.  (Photo by Evan Agostini/Invision/AP, File)

Gap is one of the many retailers caught in the crosshairs of a struggling apparel industry and the fallout of COVID-19. In April, the company warned it might not have enough money to continue operations as its stores were shuttered and the company was forced to furlough thousands of workers.

Gap shares today slid 4%. Year-to-date the stock is down 32%.

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Ines covers the U.S. stock market from the floor of the New York Exchange. Follow her on Twitter at @ines_ferre

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