There’s a three-block stretch of Fifth Avenue near Barron’s Manhattan offices that you could call Lycra Way. Within a three-minute walk, shoppers can visit multistory outposts of Lululemon Athletica, Alo Yoga, Adidas, and Puma, all of which are packed with a rainbow-colored assortment of leggings, bra tops, hoodies, shorts, and every other imaginable item of athletic-themed apparel.
The dominance of the trend has turned what used to be just a subset of the athletic apparel sector into a full-blown industry with a valuation of more than $350 billion globally, according to Grand View Research. It has also spurred a glut of competition.
Below, a look at the current athleisure marketplace, and which companies investors looking to play the trend should consider—and avoid. Analysts who are bearish on the company point to missteps such as its acquisition of Studio Mirror , and predict a slowing of the larger market. Jefferies’ Randal Konik, one of three analysts with a Sell rating out of the 35 tracked by FactSet, says fashion may have reached peak athleisure during the pandemic and is reverting toward more structured clothes. He also argues the company, whose leggings pricing often starts at around $100 a pair, could suffer as consumer budgets tighten.
When athleisure was taking root a decade or so ago, disrupters such as Lululemon and Athleta were successful in siphoning off women’s apparel customers from established players such as Under Armour , Puma , Adidas, and Nike. Some have been more effective than others in clawing it back. Nike, a Barron’s stock pick, brought in nearly $14 billion in apparel revenue in fiscal 2023 globally, up 8% year over year, excluding currency fluctuations.
Private Players Some of the hottest athleisure brands are smaller labels such as Alo Yoga, Outdoor Voices, and Vuori. Vuori’s store foot traffic surged by 704%, on average, in the first eight months of 2023 compared with the same period in 2019, according to data from Placer.ai. Alo, a favorite of celebrities and influencers, saw foot traffic rise by 120% during the same time frame. The company reportedly recorded over $1 billion in sales in 2022, nearly doubling its year-over-year growth.
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