The athleisure trend is not just in fashion with today’s retail shoppers. It is a big hit on Wall Street too.
Athletic gear sold by companies like Nike (NKE) have been a top performing segment in the broader retail and apparel categories, as Americans increasingly wear their running gear, yoga pants, and basketball shoes not just to-and-from the gym, but also around town. New fabrics and colorful prints and patterns have helped generate a whole new trendy term — “athleisure” — that describes athletic clothing that is also seen as trendy and fashionable.
Both Nike and retailer Finish Line (FINL) reported stronger-than-expected sales and profits for their latest quarters, as they each benefit from the trend. Nike’s shares hit an all-time high on Friday as investors praised the company’s results.
Nike reported a 5% increase in revenue for the quarter ended May 31, but revenue increased a more impressive 13% excluding the stronger dollar. Notably, Nike’s sales grew 14% in North America and 17% in Western Europe. Analysts speculated that the company is continuing to take market share away from its top rival Adidas, which has been struggling to defend its turf in the German company’s Western Europe home market as well as in the critically important U.S. market.
“We believe Nike is continuing to take share from Adidas,” said Sterne Agee analyst Sam Poser. Adidas’s woes were chronicled in a recent Fortune magazine story.
Many athletic-gear makers saw their shares rise due to the strong activewear trend, which hasn’t shown any signs of weakness and in fact continues to accelerate. More retailers, including H&M and Urban Outfitters (URBN), have also expanded their sportswear assortments to tap into the trend, although pure-play apparel makers such as Nike, Under Armour (UA), and Lululemon (LULU) appear to have a greater advantage to boost sales because of the trend.
Analysts were encouraged that the good times for athletic gear will continue throughout the year. Nike said futures orders, which are a strong indicator of upcoming demand for its gear, were 13% higher than the same period a year ago.