Growing registrations at gyms and health clubs ensure increased apparel sales
Anybody who has signed up for gym classes knows that we focus on purchasing clothes that make us look good while working out. Clothing companies that manufacture sports goods, athletic wear, and active wear, will monetize the increasing fitness awareness among people.
Fashion-conscious people have almost always chosen Lululemon Athletica inc. (NASDAQ:LULU) for yoga classes and NIKE, Inc. (NYSE:NKE) for gym classes. Another clothing company that interests me is Gildan Activewear Inc (NYSE:GIL) , which focuses on casual clothing but has sports and athletic lines as well. In this article, I shall discuss these three companies as investment options.
Yoga is in and so is Lululemon
Yoga is no more a trendy fad, but a lifestyle choice that many health-conscious people are making. With yoga classes and workshops springing up in every neighborhood, the demand for yoga gear is only going to increase. That is where Lululemon comes into the picture. Lululemon Athletica inc. (NASDAQ:LULU) sells premium yoga and exercise gear. Its workout gear looks great and it motivates people to get more active.
Christine Day, who resigned as CEO of Lululemon citing personal reasons, said in a quote that is already famous on the Internet: “I am not the culture of Lululemon. Everyone is the culture of Lululemon.” The company’s shares fell 18% after she announced her resignation, but it has already shown signs of recovery, with the share price increasing by 3.9% as I write this piece.
The problems for the company arose when it was forced to recall its overly sheer yoga pants that cost $100 and were deemed to be poor in quality and very revealing. The $17.5 million inventory write-down is probably behind the company, as Day noted.
Going forward, Lululemon Athletica inc. (NASDAQ:LULU) has planned store openings in Europe and Asia in 2014. The company already has stores in consumer-driven markets such as Hong Kong, Berlin, London and Singapore. It plans to have 300 stores in the U.S. alone. There are also plans to start standalone stores for men by 2016.
Though Day’s resignation came as a shock to the investment community, I see Lululemon learning lessons from its yoga pants fiasco and instead using it as an opportunity to improve its products, open stores targeted at men, and expand in Asia and Europe in the next three years. With a market cap of $10 billion and a profit margin of nearly 20%, it is a very large and profitable company that could prove to be a smart long-term investment choice.
Nike’s brand image makes it an industry leader
NIKE, Inc. (NYSE:NKE) has a diverse clientèle that remain surprisingly faithful to the brand. It manages to attract everyone from older adults to teenagers who purchase its sneakers, accessories and apparel not only to hit the gym or play sports, but also as casual wear. What Nike offers to investors is its appeal to every demographic. Though Nike recently fell by 1.4%, it will prove to be a great long-term investment option. The company’s international brand image works in its favor and will continue to drive sales and revenue.
A reason for NIKE, Inc. (NYSE:NKE)’s popularity among different cross-sections of society is its inclusiveness. For instance, Nike launched a special line of its popular Free Run 5.0 shoes in order to support the LGBT Sports Coalition. The #BeTrue Free Run 5.0 shoes are aimed at ending anti-LGBT discrimination in athletics by 2016. The company has consistently been ranked one of the most anti-discriminatory corporations, and that quality can drive up sales. Indeed, the #BeFree sneakers may not actually increase Nike’s overall revenue significantly, but they will certainly establish Nike as one of the most gay-friendly companies in the world. And that is something very positive to look at.
