New York NY – October 24, 2018 – In his upcoming book Little Black Stretchy Pants, Lululemon Athletica Inc. (NASDAQ:LULU) founder Chip Wilson reflects on the athleisure trend that sparked an apparel revolution. Today’s field of athleisure players expands beyond Wilson’s outfit, including serious challengers such as RYU Apparel Inc. (TSX-V:RYU)(OTC:RYPPF), Gap Inc. (NYSE:GPS), Nike (NYSE:NKE), and Under Armour (NYSE:UA),each offering investors an array of options to ride the athleisure wave.
According to Forbes “The Athleisure Trend Isn’t Taking a Rest” thanks in part to the “sports leisure” segment’s dominance across product categories. The athleisure trend has worked its way through clothing and cosmetics, including long-lasting and waterproof makeup designed to make people look good prior to, during, and after working out.
It’s not just in the US that athleisure is taking over. According to a report published by Allied Market Research, the global activewear market is expected to reach nearly $547 billion by 2024.
Meanwhile, typical athletic wear isn’t growing at the same rate. Consumers today want fashion with function, driving brands to offer higher quality products that consumers are willing to pay more for. This is the basis for RYU Apparel Inc.’s (TSX.V:RYU)(OTCQB:RYPPF) line of urban athletic apparel that is challenging the athleisure space by offering quality products these discerning consumers can afford.
Sustainable Growth In A Hot New Marketplace
Amid a field of familiar names, RYU Apparel Inc. (TSX.V:RYU)(OTCQB:RYPPF) is establishing itself in gyms and on the field of play as a name synonymous with quality. The result has been a proven growth trajectory, one validated by its revenue numbers which have doubled each year since 2016:
- $1.36 million in 2016
- $3 million in 2017
- $6+ million projected in 2018
- $ 40+ million projected by 2020
For comparison, RYU outsold Lululemon and Under Armour COMBINED over their first two years ($4.5 million vs $2.4 million).
In addition to its sustainable growth, RYU’s expenses have consistently dropped each year since 2017. As expenses relatively drop, RYU can expand more efficiently, having already launched new Outerwear, with plans to release Swimwear, Underwear, Footwear, and Accessories in the future.
RYU Apparel Inc.’s (TSX.V:RYU)(OTC:RYPPF) sales margins have stabilized around 46%-48% over the last years, which the company expects to improve upon once economies of scale are reached and new product lines are unveiled. The award-winning, Vancouver-based company has already opened its first American store in Venice, California earlier this year and three more stores will open before the Holiday season —fitting with its plan to double its retail footprint consistently through 2022.
In the world of fashion and lifestyle, high-profile endorsements are integral to brand success. RYU Apparel Inc. (TSX.V:RYU)(OTC:RYPPF) interviewed pro athletes, Olympians, and urban amateur athletes in order to design quality products destined for heavy usage. The company holds 22 patents on its products, including the innovative design of its RYU Locker Pack, which keeps its shape despite cramped quarters.
RYU’s design process has resulted in a long list of celebrity endorsers including Riverdale’s KJ Apa, Aquaman’s Ludi Lin, The Walking Dead’s Alicia Witt, and NHL players such as Shea Theodore, Alex Tuch, and Morgan Reilly. The company has even received the endorsement of the Jeremy Bieber Group, including social media promotion from superstar Justin Bieber.
Quality Over Quantity — Changing the Rules of the Game
While many of the larger retail names such as Macy’s and H&M are taking a hit on profit margins due to huge volumes of unsold inventory, innovative retailers such as RYU Apparel Inc. (TSX.V:RYU)(OTC:RYPPF) are taking a different approach. RYU keeps its product lines and inventory streamlined with less than 100 SKUs, and no stock in holding. The result is a drastic reduction of liabilities, leading to a higher profit margin.
All of RYU’s products are designed and tested by its CEO, Marcello Leone, whose hands-on approach has led the company to increase its quality on every single item. Leone’s attention to detail includes washing pieces 150-200 times, just to see if they retain their fresh look and feel. RYU Apparel Inc.’s (TSX.V:RYU)(OTC:RYPPF) design process is so well regarded that the company recently had to defend its trademark after Lululemon allegedly infringed on the company’s brand.
RYU Apparel Inc.’s (TSX.V:RYU)(OTC:RYPPF) dedication to innovation is one of its greatest advantages over others pursuing the athleisure trend. Where others are playing copycat, RYU has set a course for explosive growth by creating products that directly solve the issues athletes have had with previous “performance” products.
Competitors in the Athleisure Space
Nike’s (NYSE:NKE) response to the athleisure revolution has included a rapid expansion toward athletic wear for women. Nike is increasingly concentrating on the women’s athleisure market, promoting its athleisure lines as both fashionable and comfortable. The company’s prominent athleisure innovation has been its AeroReact material, which can quickly detect when the wearer is about to start sweating and has the ability to loosen itself before the onset of sweating.
Gap Inc. (NYSE:GPS) officially ramped up its entry into the athleisure game through the launch of its new sportswear brand for men called Hill City. Hill City offers all the necessary pieces, including running shorts, multi-sport shorts, a light training hoodie, and a heavier one for everyday use, as well as a wide selection of t-shirts. Where the Gap hopes to innovate is through its outdoor offerings, like a three-layer shell and its Sherpa fleece jacket.
According to Lululemon Athletica Inc. (NASDAQ:LULU) founder Chip Wilson, the aforementioned Gap made a bid to acquire Lululemon in the early 2000s. Wilson criticized the Gap’s $200 million buyout offer at the time, citing it was “inadequate”, leading to the Gap’s buyout of Athleta, Lululemon’s competitor for $150 million. Today, Lululemon is still a leader in the athleisure space, despite recently losing a legal battle with RYU Apparel Inc. over trademark issues stemming from Lululemon’s alleged use of RYU innovations.
Under Armour (NYSE:UA) has taken its own approach to the athleisure market, opting to cater to men with a “Protect This House” tagline that helped foster growth after the company’s exposure to pro football audiences. CEO Kevin Plank has continued to successfully lead Under Armour, maintaining a focus on the importance of the athleisure market, citing the sports lifestyle segment as the company’s largest opportunity.
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