Adidas is banking on Beyonce for growth with Ivy Park athletic wear line debut

KEY POINTS

• Sneaker brands have increasingly been using celebrities of all kinds, not just athletes, to endorse their products.
• Kanye West's Yeezy brand, which launched in February 2015, has been a huge hit for Adidas in terms of both culture and sales.
• Analysts say Ivy Park could eventually surpass Yeezy's sales.

Ivy Park Collection with Beyonce

Source: Adidas

Adidas is banking on pop icon Beyonce, who's dominated the airwaves for more than two decades, to do the same for the company with her new adidas x Ivy Park activewear collection, which makes its debut in adidas stores and online at midnight.

Beyonce's Ivy Park collection originally rolled out in 2016 with Topshop, but the singer pulled the line after sexual harassment claims were filed against owner Philip Green. Beyonce acquired full control of the Ivy Park brand by purchasing back shares from Green a year later.

"It's a dream come true to re-launch IVY PARK as the sole owner," Beyonce said in a statement. It's her first collaboration with adidas.

Adidas says the deal, the terms of which weren't released, makes Beyonce the first black women to be the sole owner of an athleisure brand.

Sneaker brands have increasingly been using celebrities of all kinds, not just athletes, to endorse their products. Kanye West's Yeezy brand, which launched in February 2015, has been a huge hit for Adidas in terms of both culture and sales. Yeezy sales are estimated to have earned $1.5 billion in 2019, according to Forbes.

Analysts like the deal and think Ivy Park could eventually surpass Yeezy's sales but say it could take time to fully develop.

Adidas's Ivy Park Collection, a collaboration with Beyonce, shown in January 2020.

Source: Adidas

Queen Bey, one of the most recognizable celebrities in the world, has more than 133 million social media followers on Instagram, the sixth-most-followed person globally, according to a November research note by Bank of America Merrill Lynch.

"In-line with adidas approach on other franchises, we would expect there to be a low volume, high priced launch ... to create brand heat and in the following years the brand will likely become more democratized," the note says.

"Initially, Ivy Park will be smaller than Yeezy, but Ivy Park has the potential to be larger, if managed properly," says Matt Powell, a senior footwear analyst at NPD Group.

Powell says similar to the Yeezy line, he expects Adidas to keep the quantities tight on Ivy Park. "Best way to build a brand is to have it sell out," he says. "Scarcity drives demand."

Adidas has been noticeably quiet on the release. On an analyst call with investors, CEO Kasper Rorsted said the company does not expect any substantial revenue impact this quarter. "You will see that change throughout next year," he added.