View Slideshow

Activewear is getting its moment in the spotlight.

This story first appeared in the April 28, 2014 issue of WWD. Subscribe Today.

From the fashion runways of Balenciaga, Victoria Beckham, Alexander Wang, Marni and Tory Burch to sports arenas and gyms everywhere, the $32.7 billion active business is on a growth tear, and the ath-leisure look is coming into its own.

The category is set to expand by the mid- to high-single digits in the U.S. this year — easily outpacing the growth of apparel overall. Everyone wants a piece of the action, forcing even the sector’s giants to up their game.

Activewear has not shown such significant potential for growth since the early Aughts when Juicy Couture brought back the velour tracksuit after a 20-year hiatus. Seemingly every company, big and small, is tapping into the look. Kering is using the Puma name as a pillar on which to build its sports and lifestyle business, while the Action Sports Americas division of VF Corp. is striving to reach $2.9 billion in sales by 2017 for its Vans active apparel and sport brand and its new lucy active and yogawear label.

Further showing signs of the blending of sport and fashion, Adidas AG has been beefing up its active portfolio of collaborations with major celebrity and fashion names that include Adidas by Stella McCartney, and Mary Katrantzou and Pharrell Williams, who will be doing capsule collections for Adidas Originals. Net-a-porter signed on several new active additions to its Web site in April with a sprinkling of hoodies, track pants, leggings and sports bras, and is said to be eyeing a separate section on its site devoted to the category. Other retailers also are tapping into the trend.

“We’ve really gone after the athletic business,” said Terry J. Lundgren, chairman, president and chief executive officer of Macy’s Inc., at a recent meeting with analysts. “It’s a business that’s just unbelievably — it’s just unbelievably strong compared to what we used to do. It’s not even close, and with that, it has had a direct positive impact on our apparel.”

Lundgren noted Macy’s linked up with Finish Line to provide active footwear under license as well as licensed in-store shops.

“We had 181 locations that had the Finish Line product this past year,” he said. “We’ll have 450 locations this year.…We want to get into this business for one reason and the reason is: I want to sell the apparel. I want to sell the athletic apparel, but the way this customer, particularly the young person, dresses is they start with their tennis shoes, they start with their footwear, and then they dress from there and they match up.”

Lundgren said the arrangement is working: The licensed shops are selling footwear and Macy’s is selling the coordinating apparel.

Durand Guion, vice president and men’s fashion director for Macy’s, told WWD at MAGIC in Las Vegas in February that jogger pants and elevated sweatshirts, in particular, are key items that have turned activewear into everyday, all-the-time wear.

“Our core customer has always had an active mind-set. He likes activewear, and the trends are allowing activewear to move beyond the gym,” said Guion.

At Belk, athletic looks for men are a hit, said Arlene Goldstein, vice president of trend merchandising and fashion direction. She pointed to chambray shirts, nondenim bottoms, tailored vests, puffer vests, activewear brands (such as Under Armour) and “completer pieces” as the “tools for [our customer] to create an unexpected wardrobe.”

The playing field is already very crowded and only getting more so, both at retail and with brands. Nike Inc. is the activewear market leader with $26.29 billion in sales, followed by Adidas AG, which has $14.49 billion in revenues, which includes its $2.21 billion Reebok International Inc. subsidiary, and then Puma. Other significant players include the $3.22 billion Under Armour Inc.; Lululemon Athletica Inc., a $1.56 billion premium brand, and Athleta at Gap Inc. — a fast-growing women’s sports and active apparel brand that Gap bought in 2008 for $150 million. There’s also Champion, which holds the lion’s share of business of Hanesbrands Inc.’s $1.3 billion active business.

Coming off an overall 9 percent gain in retail sales in the U.S. in 2013, the robust women’s active segment led the way with a 10 percent spike in sales, while both the men’s and children’s active businesses generated 9 percent gains in the calender year, according to The NPD Group Inc. In the U.S., the active market is expanding at double the rate of the $80 billion market for traditional apparel. Leisure Trends, an NPD company, reported U.S. sporting goods chains saw sales of running and fitness apparel, athletic footwear and accessories reach $10.5 billion in 2013, an increase of 6 percent over 2012. Globally, sales of sports apparel weigh in at $250 billion and are growing at a high-single-digit clip.

Marshal Cohen, NPD’s chief industry analyst, projects the category will “explode” in the second half of 2014 as more manufacturers and retailers jump in.

“Activewear is the bright spot in apparel right now because the consumer has decided to wear it whether she works out at the gym or not,” said Cohen. “We haven’t seen this sort of excitement in activewear since Juicy Couture’s velour jogging suit.…Retailers are going to start chasing this category big time, and I think stores are going to get into this and stay. [Retailers] are just starting to get it, because it caught them a little by surprise. The reason is it’s a consumer-driven trend, not something designed and merchandised in advance or shown in a showroom. The consumer is creating the trend.”

Cohen added that the activewear business is outpacing sales of jeans.

“It isn’t just the youth market that’s driving activewear’s growth; it’s men and women who are building their wardrobes with active apparel instead of the jeans they used to buy. You are literally watching the jeans business switch places with activewear,” stated Cohen.

This month, Chip Bergh, president and ceo of Levi Strauss & Co., told WWD that the “shift to ath-leisure” — with women’s yoga pants migrating to the same ranks of social acceptability as premium jeans — had taken a bite out of the company’s women’s business.

Comfort, style and performance are the main attractions for consumers in the active category, which has long been sports-centric and has become an omni-classification that crosses over into stylish streetwear, casual sportswear and loungewear, as well as fitness and performance apparel. The new approach to athletic apparel began as part of the ath-leisure trend, a consumer-driven style that began to percolate in the men’s apparel and accessories market in mid-2012 and then in the women’s market late last year.

Exercise wear was once designated exclusively to sports or gym activities. But consumers with on-the-go lifestyles are increasingly wearing performance apparel throughout the day and night and layer key workout pieces with a sweater or jacket for the office, and even make a dressy statement with high heels and jewelry for an evening out. Wellness trends have also played a big role, as have more exercise options for cross-fitness, boot camps, high-intensity training, spinning classes, Pilates, yoga and a new wave of fitness boutiques like Well+Good NYC, which Athleta at Gap has partnered with for special events.

The movement has also been shaped by a plethora of high-performance fabrics such as Lycra spandex that shape and smooth figures, Supplex, Tencel, MicroModal and a new generation of lightweight microfibers that enhance comfort and ease of fit. Also part of the equation are cutting-edge applications that have wicking and antibacterial properties, fibers by Invista that are microencapsulated with skin-soothing lotions, and proprietary techniques that help cool body temperatures by Outlast. Adidas launched Climachill this spring, an active cooling apparel technology that provides an instant chilling sensation to help athletes perform in warm conditions.

The untapped potential for active-related products is vast, and retailers see a silver lining as overall apparel business continues to be sluggish in a post-recessionary environment.

Hennes & Mauritz AB launched its first H&M Sport collection of active separates for women, men and children in all of its markets worldwide in January. The line has been designed with input from members of the Swedish Olympic team and features “fashionable” products with a “focus on fit and performance,” the retailer said.

Uniqlo at Fast Retailing Co. Ltd. expanded its LifeWear concept of easy, ath-leisure-inspired separates for both men and women this year. The 2014 collections include Airism for men and women with pieces designed to wick away moisture; Ultra Light Down, a lightweight outerwear line for men and women that works with body temperature to keep the wearer warm, and Heattech, a high-tech group of active-inspired separates that Uniqlo describes as “fitting like a second skin.”

Arnold Aronson, managing director of retail strategies at Kurt Salmon Associates, described activewear as a “win-win situation” for retailers.

“Retailers want to grow their activewear business and they are giving it more floor space.…You can get a very big bang for the buck because you’re not paying designer prices, you have lifestyle satisfaction, and it’s not complicated. It’s about color, function and feel-good fabrics and silhouettes,” said Aronson. “When you think of activewear, you think of a lifestyle — not necessarily about being an athlete, but about getting out and being active. There’s an aspirational level for both men and women, and it’s universal.”

Top athletic brands are responding to the call for more lifestyle-oriented products.

Nancy Green, general manager of Athleta at Gap Inc., said a larger selection of performance and lifestyle garments this year is giving the company a competitive edge.

“Our offerings tend to be broader than our competitors, who tend to focus on one sport like running or hiking,” explained Green. “The technical expertise is very important in the premium activewear space, so you can’t just get into that business if you want to be in the activewear category. With Gap now on board with Athleta, it brings even more expertise to the lifestyle category…The women’s activewear category is growing about nine times faster than the women’s general apparel category. It’s telling us that women are increasingly shifting dollars towards this category and rearranging their closets. We are starting to see it influence fashion, and we are bringing much more of a fashion and style element into our mix.”

A top-selling idea by Athleta that combines performance and lifestyle is the City Pant Collection, which was launched in February and retails between $69 and $79.

Authenticity and brand integrity are also turning consumers on to active apparel.

At Reebok International Inc., communication and marketing are priorities in growing the brand’s image of authenticity. Reebok is relaying this message through a new Fitness in Motion marketing campaign that features celebrity athletes moving through their respective fitness disciplines, said Amy Klaris, the company’s lead brand strategist.

“What we are trying to do is redefine what celebrity is.…We’re using these celebrity athletes [in the campaign] because that’s authentic to who they are. When we look for who our version of celebrities are, we want someone who represents the sport and the brand,” said Klaris.

The campaign — which was photographed by sports and fashion photographer Carlos Serrao — features elite Reebok CrossFit Games specialists Garret Fisher and Lindsey Valenzuela, who work out in the Reebok Training collection; Olympian middle-distance runner Carrie Tollefson and elite Spartan obstacle course racer Hunter McIntyre, wearing the Reebok Running collection, and globally celebrated yoga instructor Tara Stiles in the Reebok Yoga collection.

Nike Inc. has introduced several new initiatives to communicate the brand’s authenticity on a worldwide level, said Julie Igarashi, vice president of global design for women’s training.

“Our Nike consumer is global, and we communicate with her in a number of ways,” Igarashi said. “For example, the N+TC app connects our female athletes, no matter where in the world they train. In addition, we’re bringing Nike Training Club to life in more than 20 cities across the globe this year with NTC Week and NTC Tour. With these two new events, we’re bringing together thousands of girls to work out with some of the world’s best trainers and provide them with access to our premium services and products.”

She noted that performance and lifestyle play into the global picture.

“We know that the female athlete demands versatile product that can take her from the yoga or the Pilates studio to the street. We’ve seen great success with products that can do this, such as our Nike Tight of the Moment, a performance proposition adorned with beautiful artwork to highlight the body in motion. Also, our Nike Tech Fleece apparel has been tremendously successful. We brought a modern look to a traditional fabric like fleece, evolving its fit, feel and function,” she said.

Kevin A. Plank, chairman, president and ceo of Under Armour, said during a conference call with Wall Street last year that there was significant potential in a performance and lifestyle retail initiative called Women’s Studio.

“Now, probably one of the best vehicles we’ve seen our women’s product come to life has been the idea of Women’s Studio.…I think we’ve all gotten extremely excited about what it can mean and what it’s done, I think, to the dimension that’s been added to the brand, but also showing, I think, a different side of Under Armour than the female consumer has seen,” said Plank, whose company took a major stride to raising its profile in the New York market last week with the opening of a 20,000-square-foot Brand House in SoHo.

But while the active renaissance seems to have opened up a little room for everybody, global currency issues have taken their toll on a number of firms in the sector, which have flagged currency fluctuations as a drag on top- and bottom-line growth in 2013 — and for the year ahead.

Analysts downgraded their forecasts for Nike Inc. after the company cautioned that foreign currency pressures in emerging markets and sluggish sales in China would weigh on earnings in the current quarter and next fiscal year. Nike’s strong third-quarter result in 2014 was overshadowed by currency headwinds.

Meanwhile, it’s been a pretty volatile stretch for Lululemon. After being the sweetheart of Wall Street with years of double-digit growth and product launches, the company stumbled in 2013 with the recall of see-through Luon yoga pants. This item accounted for 17 percent of its women’s bottoms and cut sales by up to $67 million. The ceo Christine Day resigned and her job was taken over by Laurent Potdevin, a former LVMH Moët Hennessy Louis Vuitton and Toms Shoes executive, who joined the firm in January.

Potdevin and Lululemon’s managers spoke at a presentation for investors on April 17 at what was largely described as an “uneventful” analyst day. Analysts criticized the company for not providing a clear strategy for improving sales or specific plans to gain new customers or lure consumers into buying more. One analyst, Sam Poser of Sterne Agee, wrote, “A detailed constructive strategy, beyond the improved product, not just words, is needed to rebuild the aspirational quality of the Lululemon brand. Most of those who do not see the brand as damaged are loyal Lululemon customers, but new customers are needed for the long-term success of both the company and the stock.”

This month, a U.S. judge dismissed lawsuits which accused Lululemon and various company officials of defrauding shareholders by hiding the Luon yoga pant defects. The brand also quietly launched &go, a new collection of fast-fashion, dual-purpose apparel that has an active spin. The line includes casual dresses, pants and tank tops for customers to wear during and after their workout. These items can be worn for exercise, at the office or out for drinks with friends.

The &go tag line reads: “Every minute counts. You’re out the door at daybreak and moving until midnight. You don’t have time for a wardrobe that keeps forcing you to change. You’re busy living. We get it.”

Lululemon shares are down more than 13.7 percent since just before the analyst meeting and fell 3.4 percent to $45.50 Friday.

With a glut of competition, Lululemon, and everyone else, is going to have to keep limber and build muscle to push ahead of the crowd.