Activewear Stocks On The Rise In The US
There are clothes meant for casual wear, and there are ones meant for the gym. But with the rise of the activewear trend, it seems like yoga pants and sports bras remain in vogue even outside the gym, dance class, or yoga studio.
According to NPD Group, consumer spending in the United States on apparel, footwear, and accessories increased by one percent to U$323 billion [$426 billion] due to a rise in sales of athletic footwear and activewear. This so-called “athleisure” category ranges from staples like yoga pants, sports bras and sports tops for women to tees, sweat pants and athletic shorts for men.
Marshal Cohen, chief industry analyst for the NPD Group, said, “This is no longer a trend. It is now a lifestyle that is too comfortable, for consumers of all ages, for it to go away anytime soon.”
Indeed, it looks like the “fitster” fashion of consumers is here to stay, and it reflects on the stocks that are currently making waves in the apparel industry. Hanesbrands (NYSE:HBI) leads the pack due to its impressive run in the past year, with its shares up more than 20 percent year-to-date. Its great emphasis on activewear also makes it well-positioned to capitalise on the said fashion trend, with a growing portfolio of brands like Wonderbra, Maidenform and Gear for Sports. Its activewear business saw net sales increase eight percent in 2014, generating record profits for the second straight year.
Recent developments in Hanesbrands could also boost operating profit in 2015. The company has recently replaced Avon in the S&P 500 as its market value reached more than $13 billion. Furthermore, the company acquired collegiate apparel retailer Knights Apparel, which could fuel growth for many years ahead.
Another apparel company that is cashing in on the activewear sector is Urban Outfitters (NASDAQ: URBN) with its Without Walls brand. Priding itself with an “uncommon approach to outdoor and active lifestyles,” Urban Outfitters posted fourth quarter revenues of $1 billion — a first time for the 39-year-old company. Same store sales also increased 18 percent for its Free People brand, while its Anthropologie brand climbed six percent. Same store sales are an important metric for evaluating retail stocks because it measures sales growth at stores open for more than a year, thereby giving investors an idea of how well a certain business is operating at existing locations.
Even small underwear companies are making a mark on the activewear sector. Naked Brand Group Inc. (OTCQB:NAKD), a company that aims to revolutionise the men’s underwear industry, offers several underwear collections for men of different lifestyles. One of them is the Active Collection, which makes use of moisture-wicking microfiber fabric that provides comfort and unlimited mobility. Its athletic fit makes it perfect for men who are always moving about, and its specially designed hidden waistband makes sure that the underwear stays right where it needs to be.
With no end in sight for the rise of the activewear sector, the aforementioned companies are well positioned to continue growing their earnings and revenues in the year ahead, making them worthy of investors’ attention as early as now.
To contact the writer, please email a.lu@ibtimes.com.au.
