In Addition to Weak Sales, Beyoncé's Clothing Line with Adidas is Struggling

The music superstar is having trouble finding buyers for her inclusive streetwear line, even as her fans clamor for tickets to her world tour.

There is about a $200 million hole in the company's annual projections due to Beyoncé's fashion partnership with Adidas AG, according to documents and people familiar with the matter. 

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A Trade Algo review of the documents shows that sales of Ivy Park fell by more than 50% to approximately $40 million in 2022. That was well below Adidas' internal expectations of $250 million in sales that year. Beyoncé receives about $20 million per year in compensation from Adidas for Ivy Park, but the company is losing money for Adidas.

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She is set to end her contract with the German sneaker giant after 2023, which was signed in June 2013. The executives of Adidas have discussed the possibility of ending or overhauling the arrangement, according to sources. 

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'Renaissance' Tour Declaration From Beyoncé

In an interview with the Trade Algo, Adidas said its Ivy Park partnership was "successful" and that it would not comment on its financial performance. In a statement, the company said it was "proud of the work we had created together" and was inspired by our collective vision. An attempt to reach Beyoncé's spokeswoman was unsuccessful.

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It shows the challenges Adidas faces in its strategy to sell more streetwear and fashion sneakers by collaborating with celebrities like Beyoncé, Pharrell Williams, and Kanye "Ye" West, which is backed by one of the world's biggest music stars who just won the most Grammy awards and has over 300 million Instagram followers.

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Following antisemitic remarks made by Ye and workplace complaints involving the rapper, Adidas, a global sportswear seller with a market capitalization of $30 billion, lowered its earnings outlook in November. As one of Adidas' biggest sellers, the Yeezy brand had been a long-time collaboration with Ye.

It was launched in 2016 by Beyoncé in partnership with Philip Green, the British tycoon who once owned Topshop. There were running shorts, tank tops, hoodies, and jackets, as well as backpacks and jackets, originally priced from $35 to $60. It was in 2018 that Beyoncé purchased full ownership of the brand. 

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The partnership with Beyoncé was announced by Adidas in 2019, at the time called "a partnership of a lifetime." Aiming to replicate Ye's success when she transitioned from making music to selling sneakers, the company hoped to diversify its portfolio with women. 

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The people familiar with the matter said Adidas executives expected hundreds of millions of dollars in Ivy Park sales. The company also promised Beyoncé guaranteed annual fees and creative control of the project, the sources said. Although Ivy Park collections failed to gain the same traction as Yeezy products, it was soon obvious they would be a disappointment. 

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Its gender-neutral styles and inclusive sizing make it a favorite with women and girls alike. Dresses and accessories are also available, in addition to neon-colored sweatsuits and sneakers. There appears to be a lack of demand for many of the products offered by Ivy Park. Ivy Park released approximately half of its merchandise unsold for five of its last six releases, according to records. 

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Concerns Were Raised Years Ago About Adidas' Relationship With Kanye West

Next week, days after the Grammy Awards, Beyoncé will unveil the Ivy Park release she unveiled in Dubai last month. Prices vary from $30 to $600 for the new items, which include a basketball shoe, a camouflage sequin jacket, and children's clothing.

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Despite being featured in Ivy Park advertising campaigns, Beyoncé is not as frequently photographed as Ye did in Adidas streetwear. According to the people familiar with the matter, Adidas has also been pushing for more branding on Beyoncé's products. 

As of the end of last year, Ivy Park's sales were at $40 million, down from $93 million in 2021. The documents indicate that the company's sales will reach $65 million by 2023, compared to a $335 million target previously set by Adidas.

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The documents indicate Adidas may lose $10 million in 2022 due to the partnership. Nonetheless, Beyoncé's compensation was scheduled to be about $20 million, as it had been in previous years.