Is high-end sportswear entering an era of flops?
Despite the meteoric success of industry darlings like HOKA and On Cloud – two sneaker brands with cult consumer followings – major competitors in the sportswear market are experiencing faltering sales.
Some even close their doors.
Lululemon’s fourth quarter report revealed slowing sales in the Americas, with growth of just 9%, significantly less than the previous year, despite its continued success throughout the COVID-19 pandemic and the resulting supply chain issues. As a result, shares of the clothing giant, which once gave its competitors a run for their money, fell 16%.
During a call with financial analysts, according to CNBC, the company’s CEO, Calvin McDonald, admitted that they were “going through a slower start to the year in this market,” attributing it to a “change in the behavior of American consumers.
Meanwhile, Nike warned of a potential drop in revenue and reduced its inventory of some legacy styles last month as the company experienced its own stock decline.
“One of the things that Lululemon and Nike have benefited from over the past few years is the high prices of their high-end products and that seems to be in doubt at the moment,” said Brian Mulberry, manager of portfolio client of Zacks Investment Management, which has a stake in Nike, told Reuters.
But the decline in sales is not limited to a small cohort of companies.
Major sports brands are struggling across the board: Puma forecasts a weak start to the year in a “challenging market”, Under Armor saw revenue decline and Adidas reported its first annual loss in three decades.
Even Allbirds — the once-beloved maker of no-nonsense shoes with an emphasis on comfort worn by the likes of presidents — has faced performance issues, with company founder Joey Zwillinger announcing last month that he would be replaced as CEO by his former COO, Joe. Vernachio.
In March, sporting goods retailer Outdoor Voices closed 16 of its stores as it shifted to a strictly online presence, The New York Times reported. The decade-old brand’s valuation fell by $60 million between 2018 and 2020, and senior executives left the company.
At the time, founder Ty Haney had stepped down as CEO while remaining on the board, telling The Cut last year that she felt “sad” for the brand, which she said -she lamented publicly on Instagram, had lost her way.
Today, longtime industry leaders are fighting for market share with exciting new companies like Vuori, a dynamic young brand valued at $4 billion in 2021. Then there’s the Kardashian-backed label- Jenner, Alo Yoga, who built an empire. is aimed at Erewhon-loving and aesthetic-centric Gen Z consumers.
The company, which has taken a ride into the futuristic metaverse, envisions itself with more of a digital presence rather than a traditional physical presence, company co-founder and CEO Danny Harris told the Wall Street Journal.
“I definitely see Alo being more like Tesla, and the other guys being Ford, Chrysler and General Motors,” he said.
Presenting physical storefronts as “sanctuaries,” with matcha on tap and fitness classes according to the Journal, Alo is building more than a brand. It’s selling a complete lifestyle – and people are buying. In 2022, the company would have achieved a turnover of one billion dollars.
“It definitely seems cooler and more relevant than Lululemon,” author Ana Andjelic told the Journal. “Why do I think that?” I have no idea. That’s exactly what we’re looking for when branding works – when people can’t explain why something seems cooler than something else.
To compete with sexier, emerging brands, innovation has become a priority for legacy labels that might be falling behind.
Lululemon, according to Business of Fashion, appeared to grow too fast – faced with the challenge of “imagining new ways to grow,” they write – and ran out of steam after years of impressive performance as athleisure became a post-pandemic streetstyle standard. The retailer is, however, toying with sustainable clothing made from recycled materials to offset what the outlet called an “innovation problem.”
Meanwhile, Nike announced it would scale back its signature styles to focus on new, higher-level performance products. According to Business of Fashion, CEO John Donahoe used the hot word – “innovation,” that is – 20 times during the earnings call.
“It’s not just about a product or an item here and there, it’s about building a strong innovation pipeline,” Donahoe said.
New York Post
