How Have Athletic Apparel Companies Fared The Coronavirus Outbreak?
CV-19 has started to show its influence on a multitude of business trends. These include the rise of sanitation, working from home, virtual events and conferencing, technology investment, local shopping, e-commerce, cashless shopping, contactless delivery, and more.
Needless to say, companies in the athletic apparel sector have been forced to adapt.
For our purposes, we can observe two companies as case studies. One is Nike, and the other is Lululemon. Both companies are in the athletic apparel sector and have similarities as well as clear differences. Both were hurt by the pandemic, but by different magnitudes, and each business has different points of focus that are noteworthy moving forward. Read on to dive in!
Nike and Lululemon Performance
Nike is, without a doubt, the leader in athletic apparel and footwear. Even though they got started with shoes under Phil Knight, they now have a diverse porfolio that extends into clothing. They innovate in the technology space, creating widely used apps that connect customers. Nike also has a history of strong celebrity endorsements like the Jordan line.
Nike’s strong geographic and technological presence and reach has hurt them as well as helped them greatly. Their presence in China was hurt by the CV-19 pandemic since stores closed there months ago before reopening. Around the world, the number of stores that Nike operates is over 1,000.
However, the fact that Nike products are sold around the globe through great digital channels as well may be a reason why the stock was able to rebound at a greater percent than Lululemon rebounded after the steep price drops in March.
Compared to Nike, Lululemon is relatively new in the industry. Instead of focusing on shoes, the company focuses on yoga-inspired clothing and products with unique fabrics. The aestetic ties well into the “athleisure” culture and activewear popularity of today.
LULU stock performance as of September 2020 from EEON
It has also taken advantage of e-commerce trends which has led to high growth. In fact, it witnessed revenue growth beyond 17% between 2014 and 2019.
In terms of growing sales in general, Lululemon has exceeded Nike, but on digital platforms specifically, their sales growth is quite similar. Lululemon’s store count is nearly 500, which is significant but certainly less than Nike’s count.
When looking before and after the pandemic hit the market in March, Nike was hurt more than Lululemon. Nike had to close many of its stores temporarily, but Lululemon relies a lot on its e-commerce methods of sales and delivery.
What’s to Come
Nike’s CEO John Donohoe, however, is started to put more focus on e-commerce, aiming to have half of sales come from digital channels. Meanwhile, Lululemon, on top of launching innovative products and pursuing omnichannel sales, wants to pursue international growth.
CV-19 has hurt Lululemon in the short term due to its geographical limitations, as it gets around 85% of its revenue from North America. Since its acquisition of Mirror, a home fitness technology company, it seems that Lululemon is entering some new territory. That has certainly created a lot of excitement around the company.
While Nike has a record of strong returns, Lululemon has continued to show rapid growth for investors. As stores begin to open to the public again, continued growth should be expected.
In the long term, however, both companies will need to focus heavily on e-commerce, given trends resulting from the pandemic.
[Note: This article is not financial advice.]