Levi Strauss and Google start a new chapter in wearable technology
As we discussed in Part 1, late last month Google (GOOG) (GOOGL) and Levi Strauss unveiled a new collaboration. It embeds touch-enabled interactive technology in fabrics. Called “Project Jacquard,” the technology may become available to other firms.
Premium denim revival
The new technology may revive the denim industry. Recently, manufacturers like VF Corporation (VFC) and Calvin Klein (PVH) have seen a soft market for jeanswear in the US. They’ve faced tough competition from activewear brands like Nike (NKE), Lululemon Athletica (LULU), L Brands (LB), and Under Armour (UA).
Although some of these headwinds subsided for VF Corporation in the last quarter, the contemporary brands segment—consisting of premium jeanswear brand “7 For All Mankind”—is still being challenged. US sales for Calvin Klein also came in below expectations in the latest quarter ending May 3, 2015.
Jeans made with the new fabric will probably retail at premium prices. This will make the technology a natural fit for high-end denim wear brands like VFC’s “7 For All Mankind,” “True Religion,” and Calvin Klein (PVH). Otherwise, these brands could face further pressure at the high-end of the market from Levi Strauss.
Activewear brands like Nike, Adidas, Under Armour, and Lululemon Athletica have also been fabric pioneers in their own right. They all have fitness apps that map athletic activity for training and workouts. Connected fabrics could see wearers seamlessly enable these apps as soon as they wear training clothes.
Together, Nike, Under Armour, VF Corporation, Calvin Klein, and Google account for 3.8% of the portfolio holdings in the iShares Russell 1000 Growth ETF (IWF).
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