By  on April 20, 2006

NEW YORK — The Paiva retail concept from Finish Line that bowed last week is part of a growing trend of athletic specialty stores for women.

A number of other concepts, including LuluLemon Athletica, Lucy Activewear, NikeWomen and health club chain Equinox Fitness, all are rapidly opening stores to tap into a customer who wants upscale and directional athletic merchandise.

These stores are offering a fresh approach to selling women's athleticwear, which for many years was treated as an offshoot of men's wear, without a separate retail environment.

"This customer has been vastly underserved by the sporting goods industry," said Matt Powell, an athletic industry analyst with Princeton Retail Analysis. "There is a lot of room for growth in this sector."

Sales of women's sports apparel grew 10.8 percent to $17.4 billion in 2004, the latest annual figures available, according to information from the NPD Group and the Sporting Goods Manufacturers Association.

A key reason for the uptick in women's concepts is that female participation in sports has been rising rapidly, said an SGMA spokesman.

"The sport marketplace for years always catered to men," he said. "What we have seen more recently is the rise of more competitive female athletes who have money and whose desire to win and excel is no different than men's. Companies that cater to these women will benefit. The market is ready for these retail concepts. It is a sign that the marketplace is catering to the needs of female athletes."

Finish Line has been a leader in catering to women with its Lady Foot Locker concept, although those stores are geared to teens and young women, and haven't offered much in the way of upscale fashion-forward items.

Industry watchers expect more concepts to come.

"We will see more of this done by different retailers," said John Shanley, an analyst with Susquehanna Research Group.

Shanley noted that The Sports Authority and Dick's Sporting Goods are starting to create more feminine concepts in their stores since women tend to buy merchandise for their husbands and children.

"There is still a big learning curve for these [traditional chains] as they figure out how to do it," Shanley noted.Analyst Powell said there's a question whether there is enough of a market to sustain all the specialty chains. He said it was notable that Paiva was aiming to have 200 stores, which is not overly ambitious.

"I think the fact that this is a modest number of stores says that Finish Line understands that this is a finite business," Powell said. "They don't see this as a 1,000-store chain."

Retailers said the appeal of these concepts is that they are smaller, easier to shop and offer an edited assortment, similar to trendy boutiques such as Scoop and Intermix.

Among the chains aggressively going after these customers is Equinox, which has 33 boutiques located adjacent to its health clubs, and has new stores planned this year for SoHo and Brooklyn Heights in New York, Coral Gables, Fla., and Palo Alto, Calif. Head buyer Marian Baker, who formerly worked at Bergdorf Goodman, has brought more fashion into the business by beefing up the chain's offerings of contemporary labels such as Velvet, Splendid and Cosabella, in addition to high-performance athletic brands like Adidas and Sugoi, and yoga offerings such as City Lights.

"Many of our shoppers are looking for something special they can wear that not everyone has," Baker said during a showing last week of the company's spring offerings.

Paiva is the newest entrant and one of the most ambitious. Finish Line chairman and chief executive officer Alan Cohen told WWD that the company sees room for about 200 stores. The stores are designed to have an upscale feel, with soft lighting and understated graphics. The chain will carry a mix of performance athletic brands such as Nike and Speedo as well as more fashion-oriented lines, including Lacoste, Y-3 and Adidas by Stella McCartney. The first unit opened last week in the Barton Creek Mall in Austin, Tex., and four more Paiva stores are to open in the next month.

Last year, LuluLemon received private-equity financing from Advent International and Highland Capital Partners. The firms took a $93 million minority stake. The athletic company, which has estimated sales of about $80 million, also tapped former Reebok vice president Robert Meers as its ceo."When we started in 1998, a lot of the big companies were just making dumbed-down men's stuff and weren't recognizing that women could dress way more feminine and not lose a sense of quality," said company founder Chip Wilson. "Now the market has caught up, but I think we will have a lot of growth ahead of us."

The Vancouver firm has 36 stores, primarily in Canada and on the U.S. West Coast, and is looking to open more in the Midwest and on the East Coast, said a company spokeswoman.

LuluLemon recently launched a secondary retail concept called Oqoqo that is more streetwear-oriented and features clothes made of natural and organic fibers. Oqoqo carries skirts, tops and dresses, as well as a selection of denim, at an average price of about $80.

"The crux of this concept is, you don't have to wear a hemp burlap sack to feel eco-friendly," said Darrell Kopke, general manager of Oqoqo.

Lucy also received financing last year, from Chico's FAS, which took a $10 million minority stake. Founded in 1999 as a Web site, Lucy was revamped in 2004 and began opening stores. It is rapidly expanding and operates 28 stores across the country. Ceo Mike Edwards said many brands are looking to tap into activewear.

"People are realizing that the casual approach to apparel is here to stay," he said. "Everyone senses there is growth potential there."

Lucy is entering new markets, including Dallas and Chicago, and is "highly interested in the East Coast corridor," said Edwards, who added that the chain might eventually have between 200 and 400 doors.

"We don't foresee any slowing down at this point," he said. "Our business is very strong, and our designs and deliveries keep getting better."

The company is also pumping up its private label merchandise, he noted.

NikeWomen is on the move and has opened 10 stores in the last 20 months. They feature many of Nike's innovations for women, such as the women's version of its popular Nike Shox footwear, said a company spokeswoman.

Local stores also are growing fast. In New York, JackRabbit Sports, a specialty concept for women athletes, is hoping to become a citywide chain. The company recently opened a 3,000-square-foot store in Union Square in Manhattan. It also has one in Brooklyn, and is interested in opening other stores in the New York area."Our focus is on customer service," said JackRabbit owner Lee Silverman. "That is what sets us apart."

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