Athleisure Wear is Crushing it on the Street

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Oct 10, 2018, 08:30 ET

NEW YORK, October 10, 2018 /PRNewswire/ --

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Fashion trends are constantly changing. What's popular one day may not be the next. Athletic wear styles rarely change, but athleisure wear is changing the entire market and creating lucrative new revenue streams for businesses that take part in this exciting new segment.

Athletic wear sales have grown by a whopping 61 percent since 2007.
Morgan Stanley forecasts sales of $355 billion by 2021, up from $290 billion now.
Celebrity marketing partnerships boost companies' social media profiles.

Athleisure wear revolves around a company like RYU's ability to combine workout-ready clothing with comfort and global appeal. The modern athleisure market is all about creating apparel that is suitable for both high performance and daily use. RYU Apparel, Inc. (TSX-V:RYU) (OTC:RYPPF) (RYU Profile) is the newest threat to challenge the fashion monopoly controlled by conventional clothing conglomerates Nike, Inc. (NYSE:NKE); Gap, Inc. (NYSE:GPS); Adidas AG ADR (OTC:ADDYY) and Lululemon Athletica, Inc. (NASDAQ:LULU).

To view an infographic of this editorial, click here.

A Hot Trend in Fashion: Athleisure

The current state of the fashion industry is not looking good for established companies like that choose to remain dedicated to the declining performance apparel segment of the fashion industry. Some companies, however, are changing scope and broadening their athletic wear to include athleisure wear.

RYU (TSX.V:RYU) (OTC:RYPPF) interviewed athletes and trainers, asking them what they want most from their performance apparel. The resulting products were designed to achieve professional performance without giving up a moment of comfort. This approach has allowed companies such as RYU to cater to both the fashion and athletic wear markets through its athleisure line without alienating its customers.

Adidas has partnered with Kanye West on Yeezy, a luxury athleisure line with a high price point. The highly coveted Yeezy sneaker models flew off the shelves and immediately sold out the day they were sold in stores, prompting Adidas to promise the shoes could be purchased online as well. The Adidas Yeezy Boost 350 V2 was the second-most Instagrammed sneaker ever.

The athleisure market has captured the attention of other apparel conglomerates as well, and for good reason. The athleisure industry grew by 17 percent in 2017 and is now the largest apparel category in the United States. Even Nike has taken notice of this market shift and has responded by creating a new line in collaboration with Serena Williams and Off White.

RYU's head start in athleisure has given the company a considerable advantage as major brands battle to secure their share of the athleisure market. The company's revenue has grown each year since 2016 ($1.36 million in 2016, $3 million in 2017, and $8 million projected in 2018) and even outsold Lululemon and Under Armour combined over their first two years ($4.5 million versus $2.4 million) of business. RYU expects to see margins increase once economies of scale are realized.

RYU's first mover advantage gives it the edge in the athleisure industry, with companies such as Wrangler, Nike, Lululemon and others fighting to catch up. The demand is there. The question is, how will companies survive in such a competitive market?

Companies such as H&M have already found it difficult to avoid inventory crunch because their entire business model revolves around selling low-margin items at high volumes. In athleisure, the successful companies are more likely to sell high-margin, premium items that guarantee quality. While major brands such as Nike and Adidas may be willing to offload unsold product via outlets, others such as RYU don't discount their merchandise.

Patent-Protected Innovation

RYU's quality products come from the top. Each item is designed by fashion tycoon and CEO Marcello Leone to achieve a professional level of performance. Leone is personally involved in the design and testing of each product on RYU's line, ensuring each item will perform after every use. This dedication to quality allows RYU to maintain a limited number of SKUs, limiting inventory and maintaining stable margins.

Another important thing to look for in this industry is a company's ability to secure patents on its innovative athleisure wear. RYU owns several patents on its products, including the "Trilayr" waistband that addresses several problems with existing yoga pants, allowing a full range of flexibility for yogis, weightlifters, walkers and joggers.

RYU's innovative approach to its technical gear also led to the creation of the company's patented OutLayr technology, which provides a number of RYU products with waterproofing necessary to survive outdoors in any type of environment, rain or shine. These patents are a critical aspect of RYU's product design. With each innovation, RYU has created legally protected designs that establish its products as the industry standard for performance apparel.

The athleisure trend is about more than just clothing; however, it's about demanding quality and performance in every setting. RYU is more than a clothing company, its an innovative tech company dedicated to improving the quality of urban athletic wear with every product they design. The company's extensive list of patents is an extension of this approach, providing legal protection against competitors lagging behind.

The Athleisure Trend Isn't Slowing Down

The biggest growth is yet to come in athleisure. Lululemon's shares hit a record high of $160.68 this month with total sales in the quarter ending July 29 rising 25 percent to $723.5 million. Morgan Stanley expects the industry to be worth over $350 billion by 2020, leaving plenty of room for growth for RYU and others that continue to innovate in the space. RYU's experienced management team's innovative approach to product design is expected to maintain its advantage over the competition.

Nike, Inc. (NYSE:NKE) is an international fashion and performance apparel company that has established footholds in most major sports categories. The organization produces performance apparel and casual clothing and dominates the international shoe market. The company is working to catch up on the athleisure trend, adapting its popular line of Air Jordan sneakers to include technical improvements, such as self-tightening laces.

Lululemon, Athletica, Inc. (NASDAQ:LULU) is one of the largest names in the athleisure wear market. Projections suggest the company could reach $3.2 billion in sales this year, driven by solid numbers in women's pants, Lululemon's most profitable category. The company's current focus is on fashion over function when it comes to its approach to athleisure.

Adidas (OTC:ADDYY) is an international performance apparel, casual apparel and shoe manufacturer. The company joined the athleisure movement in order to take on its rival Nike, which helped drive Adidas' stock price up to an all-time high of $218 per share in August. Adidas continues to appeal to the urban athletic wear market through its partnership with West's Yeezy line, which released a new edition of the Yeezy Boost 350 V2 in September.

Gap Inc. (NYSE:GPS) is a retail clothing company beginning its expansion into athleisure apparel. The company announced it will soon be launching a new brand called Hill City that will cater to male urban athletes and professionals, mimicking the success the company experienced with its Athleta line for women. The company's Athleta line is expected to cross the $1 billion milestone in sales over the next couple of years.

For more information on RYU, please visit RYU Apparel, Inc. (TSX.V:RYU) (OTC:RYPPF). Please also read and review and the following article:

Meet The Innovative Sports Apparel Company That Crushed Lululemon and Under Armour's Numbers

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