Consumer

Shelly Banjo is a Bloomberg Gadfly columnist covering retail and consumer goods. She previously was a reporter at Quartz and the Wall Street Journal.

Activewear is getting overstretched.

"Athleisure" -- so popular it grew into its own category within the clothing industry -- rocked the fashion world in recent years by taking stretchy leggings and neon crop tops out of the gym and into everyday life. Now, after a pretty great run, sales of the fitness attire that Under Armour and Lululemon made stylish to do "absolutely nothing (and everything) in" are losing steam. Meantime, as discounters Walmart and Target push further into sportswear, and fast-fashion retailers like Forever 21 and H&M get in the game, prices are coming down.

Downward Dog
Outside of Nike, shares in many of the biggest sellers of athletic wear are down in the past year
Source: Bloomberg

It all spells saturation in a market estimated by research firm NPD Group at $44 billion in the U.S. alone. That should be of concern to apparel makers, because activewear has been a rare bright spot in an otherwise sluggish clothing industry. Activewear sales increased by 16 percent in 2015 from the year before, compared to a 2 percent year-over-year rise in total apparel sales, according to NPD. Stripping out the category, total clothing sales would have declined by 2 percent, NPD said.

After companies led by Lululemon showed they could make hefty profits off of stylish, $100 yoga pants, heavyweights like Nike further embraced the trend, while Dick's Sporting Goods and Sports Authority created their own private-label brands. Then, discounters, specialty shops such as Victoria's Secret and even luxury players like Tory Burch piled on.

Now, it seems like everyone has their own athleisure line (ahem, Beyonce).  And the overload is pushing down average selling prices across the industry. 

Take a look at what's happened to activewear tights and capris, arguably the staple of any athleisure wardrobe. 

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Average selling prices dropped 9 percent in the first quarter of 2016 from a year earlier, according to data from research firm SportsOneSource. And with unit growth slowing, that's contributed to a 6 percent decline in the dollar amount of tights and capris sold in the first quarter from the year before, SportsOneSource said.

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Those lower prices are a red flag for Morgan Stanley analyst Jay Sole. He sounded the alarm on Under Armour this week, pointing out that declines in the average selling price of the company's apparel was now a six-quarter trend. 

Although Under Armour got a pass for soft fourth-quarter data due to warm weather, "the fact it has persisted when weather was more normal is a troubling sign,"  Sole wrote, citing an industry slowdown, as well as lost market share among women's apparel.

Soft Spot
Year-over-year change in Under Armour's U.S. wholesale apparel sales
Source: SSIData, Morgan Stanley

Under Armour's women's products are "lacking the fashion component today's consumer is demanding and can now easily get from the multitude of new brands that have emerged as legitimate competition," Sole wrote. (Indeed, some athletic-wear sellers are finding their workout gear isn't stylish enough for  fashion-conscious buyers.)

Likewise, a rash of recent bankruptcies suggests the sports and athletic-gear market can no longer support a bunch of retailers that don't stand out to consumers. Just in the past year, bankruptcy filings have come from City Sports, Sports Authority, Pacific Sunwear, American Apparel, and Quicksilver. Earlier this month, Bloomberg News reported that sports retailer Eastern Mountain was preparing a bankruptcy filing.

While it's unlikely people are going to wake up one day and decide they no longer want to put on comfortable jogger pants to run weekend errands, activewear is likely to "go from a growth category to a staple category," SportsOneSource analyst Andy Annunziata told Gadfly in an interview.

In the same way denim went from a blow-out trend to a fashion staple, activewear makers are going have to weather fashion cycles and they're going to have to keep mixing things up if they want to stay appealing to consumers. Whether that means using different materials, adding new features like odor control, or keeping pace with changing color and fashion trends, it's clear that it's no longer enough to just trot out a pair of stretchy black leggings and expect customers to buy your goods, regardless of how cheap the items are.  

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Shelly Banjo in New York at sbanjo@bloomberg.net

To contact the editor responsible for this story:
Beth Williams at bewilliams@bloomberg.net