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‘Athleisurewear’ Industry Sees New Entrants

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The “athleisurewear” opportunity

In late April, Kohl’s (KSS) announced it was partnering with yoga wear company Gaiam (GAIA) to exclusively retail its products. Kohl’s joins a long list of apparel firms and retailers looking to cash in on the growing craze for “athleisurewear,” particularly among women.

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The players

As we discussed in Part 2 of this series, the category is growing faster than the overall apparel industry in the US, especially women’s wear. Conventional apparel lines are showing slower or even negative growth depending on the retailer.

The beauty of athleisurewear is that it’s multifunctional. It’s used not only for workouts but also for a wide range of social occasions, which enhances its popularity among women, especially Millennials and Generation Z. The rise in its popularity coincides with the declining popularity of denim wear in developed countries, with consumers gravitating toward prints and shunning wardrobe staples.

Such is the trend’s strength that mainstream apparel companies The Gap (GPS) and L Brands (LB) are two of several firms stepping into the athleisurewear game. Again, their lines cater to women.

Foot Locker’s (FL) Six:02

Nike’s biggest customer, Foot Locker (FL), is a relatively new entrant. It’s looking to expand its sales contribution from women’s wear by developing its own proprietary brand, Six:02. FL is also looking at more destination retail zones, enhancing product availability at its own banner stores, developing relationships with vendors like Nike (NKE) and Under Armour (UA), and enhancing its presence online.

NKE, KSS, GPS, and LB together constitute 0.6% of the portfolio holdings in the SPDR S&P 500 ETF Trust (SPY). KSS, LB, and GPS also constitute ~2.9% of the holdings in the SPDR S&P Retail ETF (XRT). Nike is also a significant part of consumer discretionary funds such as the Fidelity Select Consumer Discretionary Portfolio, of which it comprises roughly 6%.

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