All glammed up with flashy colors and trendy styles,
athleticwear is building muscle in the fashion world. And brands
on the IBD 50 list of top stocks are among the companies seeing
Yoga pants, leggings, sweatshirts, tank tops -- name the
workout attire and it has made its way from the gym to Main
Athleticwear has taken center stage as a go-to casual wardrobe
for women and men to sport most anywhere, anytime, as power
brands such asNike (
),Under Armour (
), Adidas andLululemon (
) ratchet up the style quotient. These companies are driving the
trend by coming out with fashionable products that make people
look good wearing them, says Brian Sozzi, CEO of Belus Capital
"Five years ago athletic apparel was boring to the eye and
unflattering to the body," he said. "Now, you walk into aDick's
Sporting Goods (
) store and you see an assortment of colorful, improved quality
apparel from Nike and Under Armour. And they're bringing new
merchandise into the stores more regularly."
What Suits Sales
Hot pink and bright orange shirts, jackets, hoodies and
leggings for women and girls are among the back-to-school items
from Nike and Under Armour featured on athletic gear
retailerFinish Line's (
) website. Wild prints such as Nike's tiger stripe and spotted
leopard pants are also in the lineup.
The newest crop of athleticwear has a more flattering fit,
adds Sozzi. Shirts and pants are more form-fitting vs. baggy
designs of years past.
"One of the only trends to really have any traction this year
is active wear," Marshal Cohen, chief industry analyst for the
NPD Group, told IBD in an email interview.
"Active has been hot for a while, but just not this
widespread. Active is everywhere," he said.
Activewear is outrunning the apparel industry. U.S. sales of
activewear for men, women and children rose 13% in 2013 from a
year earlier compared with just a 2% gain for total apparel, not
including activewear, according to the NPD Group. Activewear was
up 7% from July 2013 to June 2014 to $33.6 billion vs. about a 1%
rise in total apparel sales to $172.6 billion.
The trend has helped fuel growth at companies such as Under
Armour and Nike.
Under Armour, an IBD 50 stock, has been on a long-running
winning streak with double-digit sales gains. The stock's pace
has picked up a bit to over 30% in each of the past three
quarters from the 20%-plus range the prior seven quarters.
Earnings have been up by at least double-digit percentages in all
but one of the past five quarters.
Nike has also seen its sales growth pace step up recently to a
double-digit rate the past two quarters, up from single-digit
gains the prior five quarters.
The activewear trend started in footwear, says Cohen, with
bright-colored athletic shoes being worn for all occasions.
"And then the apparel side kicked in gear," he added. "So
while apparel is the hot spot right now, footwear is right there
The trend has helped retailers such as athletic footwear store
operatorFoot Locker (FL) as well as department stores that sell
activewear, such asMacy's (M).
Foot Locker, an IBD 50 stock, has logged at least double-digit
earnings growth in all but one of the last 15 quarters. And
analysts polled by Thomson Reuters see it maintaining that pace
with a 17% rise when it reports second-quarter results on Friday
before the bell.
Finish Line operates licensed athletic footwear shops in
Macy's stores. In addition, Macy's operates activewear
departments that sell various brands. On Macy's second-quarter
conference call last week, Chief Financial Officer Karen Hoguet
said "active is on fire," when discussing Macy's "strong" start
to the back-to-school season.
Analysts expect athleticwear to be the hot trend for the
back-to-school shopping season, which kicked off late last
"No question, active will dominate for boys and even make its
mark for girls for (back-to-school)," said Cohen.
It also tends to be a category that is less "seasonal," he
adds, and can be worn throughout the school year, not just in
spring or fall.
Sozzi concurs that for back-to-school the "uniform of choice
for kids is athleticwear."
He says traditional teen apparel retailers such asAeropostale
(ARO),Abercrombie & Fitch (ANF) andAmerican Eagle Outfitters
(AEO) are "extremely weak" in the athleticwear segment.
So for back-to-school, he says, the teen customer will
gravitate toward name brands such as Nike and Under Armour. Sozzi
says department stores such as Macy's and value-priced retail
operators such asKohl's (KSS) andJ.C. Penney (JCP) have improved
their assortments of athleticwear and have devoted more space to
the catalog over the past two quarters because there has been so
Piper Jaffray analyst Sean Naughton adds that recently there
has been a strong "dual-gender" fashion trend in athletic apparel
and footwear for leisure.
According to his firm's survey work, denim has been
down-trending among teenagers since the fall of 2010 and he
believes that athletic apparel has benefited.
"Consumers have not rounded out their closet with athletic
apparel, which is important for the trend to continue," he
For example, in 2011 his firm's survey work indicated that 75%
of young women owned more than five pairs of denim, which could
provide further legs to the "Athleisure theme," he added.
How hot is athleticwear as a fashion trend? Naughton answers
by citing the Spring 2014 Piper Jaffray Taking Stock With Teens
When asked what their favorite apparel brand was, the Nike
brand captured 23% of the vote, up from only 5% in 2009, says
Naughton, who is one of the survey's authors.
"Nike continues to connect very well with the youth culture,"
Basketball shoes are very popular right now, and they are
driving some of the trends in athletic footwear, he said.
Nike products such as its Jordan brand and collections from
marquee athletes such as basketball stars LeBron James, Kevin
Durant and Kobe Bryant "should remain strong", he added.
Under Armour, Nike Grow
Nike is also faring well on the apparel side. In its fourth
quarter, reported in June, Nike apparel sales in North America
were up 9% from a year earlier excluding the impact of foreign
exchange. For all of fiscal 2014, they were up 10%.
Under Armour saw sales of apparel, its biggest growth driver,
climb 35% during its second quarter to $420 million.
"In general, we continue to see success where we drive newness
and excitement for the consumer, including innovation stories
like ArmourVent (a keep-cool mesh fabric) as well as enhanced
design elements through products such as Alter Ego
(superhero-logo shirts) and graphic tees," Under Armour Chief
Financial Officer Brad Dickerson said on the company's
second-quarter conference call.