Kelsey Cole’s closet is stuffed with Lululemon: a backpack, skorts in every color, and leggings she pairs with Stuart Weitzman boots for her job as a venture marketer. Not just her closet, but her top drawer is full too. Comfier Lululemon sports bras have all but replaced traditional underwire bras.
Kristin Marquet feels equally passionate about her Athleta clothing. More than 75 pieces of Athleta, mostly bought online, are her go-tos for running her branding and design firm, doing errands, and going on weekend date nights with her husband. “For sure, my wardrobe has become more stretchy and sporty over the years,” she said.
While traditional mall traffic dwindles and retailers trim back locations (according to Coresight Research, 7,567 stores will close this year), Lululemon and Athleta, a subsidiary of Gap Inc., have seen their fortunes rise and store traffic increase as athleisure becomes ath-lifestyle.
This goes beyond wearing yoga pants for Sunday brunch. The ath-lifestyle is about biking to work, powering through meetings and memos, and heading out to dinner—all while wearing one stretchy, sweat-wicking, SPF-providing, wrinkle-resistant outfit. Born from gym-wear, yes, but much sleeker.
“I would never ever call either of our [personal] styles athleisure,” Cole said, referring to how she and her partner, Angelo Dodaro, dress for work. Dodaro’s been known to pair Lululemon’s ABC pants with a $1,400 John Varvatos blazer. Cole added: “You really can’t tell we’re in performance wear. No one has ever noticed.”
The ath-lifestyle isn’t just growing more polished, it’s showing up in high-end fashion. Chanel models wore bike shorts during the spring 2019 runway show, as did Fendi and Dior. Kim Kardashian and Kanye West have long proposed that Lycra is luxe—see every Yeezy collection ever.
Thanks to consumers who love Lulemon’s mix of function with a dash of fashion, the company’s stock is up more than 50% this year, while its revenues are up 22% year-over-year. The $3.3 billion Vancouver-based company’s comparable store sales, profit margins, and full-priced selling all rose during its second fiscal quarter.
“Nobody has the loyalty and the ability to sell full-price the way that Lululemon does right now,” said John Kernan, a research analyst with Cowen.
“We each spend at least $2,000 a year at Lululemon,” said Cole, again including Dodaro. “With their focus on work wear now, that number could go up.”
Athleta has grown at a 23% compound annual growth rate since 2012. The brand had revenues of $883 million in 2018 and are on track to reach a billion this year, said the company’s chief marketing officer Sheila Shekar-Pollak. Parent company Gap Inc., which is spinning off Old Navy and shuttering 200 Gap stores, pegged Athleta as its growth vehicle in a presentation to investors earlier this month. The company opened 25 new Athleta stores this year, more than initially planned, and inked a deal to open Athleta franchises internationally.
In tech fibers we trust
Activewear, a roughly $57 billion market according to the NPD Consumer Panel, has been among the strongest and fastest-growing apparel sectors for the past decade.
“A decade ago, we needed three or more wardrobes—one for work, one for the weekend, and maybe a half-wardrobe for Saturday night. Now we want one wardrobe of multi-function pieces,” said Matt Powell, sports industry advisor for NPD Group.
Both Lululemon and Athleta are bidding hard to provide that one, multitasking wardrobe—the pieces that are easy-care, packable, lightweight, and stylish. Cole, who travels constantly for work, said Lululemon’s leggings don’t weigh down or take up too much space in luggage, and they can be hung to dry overnight in hotel rooms.
“Women are living busier and more fluid lives,” said Athleta’s Shekar-Pollak. “They need product that keeps up with their lifestyle and expect their wardrobe to deliver ultimate versatility.”
In recent visits to Boston-area stores by Fortune, both retailers had fashion-flavored pieces, such as drapey, tie-waist shorts and cropped pants, positioned at the front. On Athleta’s website, best-sellers include a $198 blazer (touted as packable, tear-resistant, and with 50+ ultraviolet protection) and $118 stretchy jeans (suggested use: hiking or climbing).
Athleta was “first to the party” in seeing that sport-inspired garments had everyday appeal, said Jane Hali of retail investment research firm Jane Hali & Associates. However, Lululemon is catching up fast.
Buoyed by its strong OTC (office, travel, commute) collection and ABC (anti ball-crushing) pants for men, Lululemon continues to explore what else loyalists might buy. A trial run of personal care items, including deodorant, dry shampoo, and moisturizer, was so well received that CEO Calvin MacDonald said in an analyst call that the company would add more products before the end of the year. Lululemon is also going to launch a sneaker line, but has not said when they will be available.
The Coke and Pepsi of ath-lifestyle
Rather than trying to bump each other out of the race, Athleta and Lululemon are developing differentiated but loyal audiences: a Coke versus Pepsi, if you will. To outsiders, the pieces look similar, but insiders switch loyalties less than you’d think.
“Nope. The brand doesn’t resonate with me. I don’t identify with that consumer,” said Athleta enthusiast Kristin Marquet when asked if any of her $5,000 a year activewear spend goes to Lululemon.
Powell said, in general, Lululemon courts premium-spenders more actively than Athleta does. In July, Lululemon opened their “Sweat Life” brand embodiment: a multi-level store with a café, studio classes, and shopping in Chicago’s Lincoln Park neighborhood. A second experiential store will open in the Mall of America in Minneapolis.
While Lululemon aims for an insider experience, Athleta touts everywoman empowerment and sustainability. The brand has doubled down on providing clothing for women by extending size ranges to 3x. (Parent company Gap Inc. has, for the moment, addressed men’s clothing through Hill City, a new performance-lifestyle brand.) In 2018, Athleta became a B Corp, which comes with fair trade, waste reduction, and sustainability pledges. In its investor presentation, Gap Inc. said seven of 10 customers said sustainability is important in purchasing decisions.
Of course, there’s plenty of competition from other brands. Nike sells more women’s activewear in the US than anyone else, according to NPD, and CEO Mark Parker said he is “bullish” on growing that business. And brands from Outdoor Voices (stretchy stuff for #DoingThings) to Ministry of Supply (performance workwear), have taken aim at the intersection of movement and comfort. Then there are newcomers including Epoquee Evolution (“we believe in one wardrobe doing it all”) founded by two former Athleta employees, and Aday, which offers “technical, seasonless, sustainable” clothing sold in travel-ready assortments.
Is the ath-lifestyle here to say? If you seize each day as Kelsey Cole does, the answer’s yes.
“Bottom line, we live in a fast moving world,” Cole noted. “Our clothing needs to match the pace at which we run. And let’s face it, we’re running in far more places than the gym these days.”
More must-read stories from Fortune:
—Old Navy is about to sail away from Gap Inc.—and into some choppy waters
—A new distillery tells the true–and often untold–origin story of Tennessee whiskey
—Maker’s Mark is making its first-ever limited-release bourbon
—Big-box rebound: How Target packaged a turnaround
—Rent the Runway’s monthly subscription could be a game changer
Follow Fortune on Flipboard to stay up-to-date on the latest news and analysis.
Thanks to the Courtesy of :