Special IssueWWD 100 issue 07/23/2008
|4. New Balance|
Like the athletes they dress, activewear brands are winning in a tough, competitive climate. Perhaps it’s the general trend toward health consciousness, or maybe it’s the casualization of America, where the active sector is a $22 billion industry, but activewear brands continue to grow while their sportswear contemporaries struggle.
Giants Nike, Reebok, Adidas and New Balance held their control of the top four spots, but more niche brands, like Under Armour and Lululemon, are also booming. And with the highest-profile sporting event in the world — the Olympics — in the most populous nation in the world this August, the roles of these major players are expected to continue their growth trajectory.
Nike maintained its dominance of the active category. Spending an estimated $150 million for marketing associated with the Games, Nike is pouring energy into the Olympics in China, the brand’s second-largest global market, where it also holds the top spot.
The first active firm to hit $1 billion in sales in China this year, Nike Inc. is aggressively rolling out stores and already boasts more than 3,500 doors there. While the company continues to focus on dressing athletes at major competitions — from Maria Sharapova at the U.S. Open to Paula Radcliffe at the New York Marathon to being the offi cial outfi tter of the U.S. Olympic team — and expects its namesake brand to deliver three-quarters of the growth to get it to its $23 billion goal, the Portland, Ore.-based behemoth is also shifting around its profi table “other business” sector. It bought Umbro for $285 million, sold Starter for $29 million to Iconix Brand Group Inc. and dealt Bauer Hockey for $200 million to an investor group led by Kohlberg Co. and Canadian businessman W. Graeme Roustan.
Reebok, which consistently ranks second in the WWD poll, is one of the few active brands not excelling. Sales at Reebok, which Adidas AG acquired in 2006, again failed to grow, holding flat at $3.2 billion for the year. As a result of the lackluster sales since Adidas bought the Canton, Mass.-based brand, Adidas appointed a new chief executive officer for Reebok. On April 1, Uli Becker, Reebok’s chief marketing officer and an Adidas veteran, succeeded Paul Harrington, a Reebok insider, as president and ceo of the brand. According to Becker, the biggest challenge for Reebok, which celebrated the 25th anniversary of its famous Freestyle shoe in the last year, has been a lack of consistency. The company is focusing on running and women at the intersection of sport and lifestyle.
On the other hand, Adidas has been booming. For the fiscal year, Adidas brand sales increased 12 percent to $9.9 billion, and Adidas backlogs are at their highest levels in a decade. As the official sportswear partner of the Games, Adidas stands to make a big impact in China, where it is building two stores a day. By 2010, China will be the company’s second-largest market after the U.S., with a targeted 1 billion euros, or $1.58 billion, in sales. Additionally, the Herzogenaurach, Germany-based brand sponsored the Euro 2008 soccer tournament in June.
The 102-year-old New Balance held at fourth place, but it is determined to make the leap from cult running brand to true competitor in the athletic arena. The brand, which does less than $2 billion in wholesale volume, launched its biggest global ad campaign ever, with triple the media spend, a year after Rob DeMartini took over as ceo. The Boston-based company is “recasting” the brand, illustrating how New Balance products help tip the scales toward love in an athlete’s love-hate struggle with running — which the company in turn hopes will take the brand to $3 billion in sales by 2011.
Up two places from seventh to fi fth, Converse is one of the lucrative “other businesses” that Nike Inc. has kept. The estimated $2 billion brand, known most for its footwear, has become a global lifestyle brand, complete with a premium apparel line by John Varvatos.
Holding at sixth, Champion, a $1.5 billion collegiate branded activewear and casualwear brand, has been a growth leader for parent company Hanesbrands Inc. The brand has posted double-digit sales growth for three consecutive years, and Kevin Hall, chief marketing officer at Hanesbrands, sees the category as “just exploding.” Hanes invested heavily in a “more contemporary” ad campaign, entitled “How You Play,” for the 88-year-old label. It also entered a 10-year marketing and co-branding partnership with the Walt Disney Co.
In sixth place this year, up from seventh, Puma is Europe’s second-largest sporting goods brand after Adidas. Its earnings increased 2.2 percent to $371 million, on sales that rose 0.2 percent to $3.28 billion. During the year, the German brand opened 25 stores globally, for a total of 116. PPR-owned Puma, also based in Herzogenaurach, in February appointed Hussein Chalayan as its first creative director when it acquired a majority stake in the Cyprus-born designer’s signature brand. Creating buzz, this year Puma partnered with actor Luke Wilson for a golf line and model-heiress Lydia Hearst for a mainstream-priced bag and fi tness line. While the brand has had a challenging start to 2008, ceo Jochen Zeitz said that 2008 continues to be an important year for the brand, with three major growth platforms: June’s European soccer championships, where Puma sponsored five teams; the Olympics, for which Puma is sponsoring many national teams, and the Volvo Ocean Race in Alicante, Spain, in October, in which Puma has entered a team.
Ironically, Danskin dropped three spots to eighth in the year since Iconix Brand Group bought the venerable dance label. The branding company pumped seven fi gures into repositioning Danskin with its first ad campaign under the Iconix umbrella, featuring model Camila Alves (Matthew McConaughey’s girlfriend). At the end of 2007, to commemorate Danskin’s 125th anniversary during the last 125 days of the label’s 125th year, Iconix unveiled the Danskin Heritage Collection, which included 10 limited edition styles, redone in luxurious fabrics.
After partnering with Phillips-Van Heusen Corp. last year for a sportswear licensing deal, Timberland Co. held on to ninth position. The outdoor brand is taking a lead in the green movement, creating a Green Index product labeling initiative with metrics developed for a consumer awareness program. Timberland’s approach will bring hard numbers on climate impact — so-called eco metrics — into product development for the fi st time. The company is also launching international e-commerce in multiple countries worldwide. Spalding rounded off the list at 10th, as the only new entry (replacing LA Gear, which managed to hold on to its ranking long after its Eighties heyday).
Russell Athletic president Doug Kelly assumed the management responsibilities of both the Russell and Spalding brands, a year after the two team sales forces merged to better compete in the institutional markets and maximize synergies. Effective March 31, Kelly succeeded Scott Creelman, president of Spalding, who retired but continues to serve as a consultant to the company.