GPS Gap Inc

By Sara Germano 

At a time when workout gear is fashionable, companies that make and sell sportswear are facing a strange predicament: their gear is too sporty for some.

Karyn Riale, chief buyer for high-end gym chain Equinox, has stopped carrying traditional brands such as Adidas at the shops in its locations. Instead, Ms. Riale said she prefers to make room for what she calls lifestyle brands like Michi, which makes mesh-paneled leggings called "Psyloque" and "Suprastelle."

Foot Locker Inc. also is adjusting the selection at its stores after noticing that upstart brands with higher style quotients such as Alala and Koral are performing well, and activewear endorsed by celebrities, including Rihanna, is driving sales.

"We believe we have overemphasized the performance aspect of what our customers want in terms of athletically inspired apparel," Chief Executive Dick Johnson said in late February. Shoppers are "very, very informed about style," and want to look good "going out after class for a juice or coffee," he noted.

As a result, some mainstay sports brands and retailers are rethinking the balance between performance and fashion. The success of women-centric athletic companies such as Lululemon Athletica Inc. and Gap Inc.'s Athleta have paved the way for hundreds of brands to jump on the athleisure bandwagon, according to NPD Group sports industry analyst Matt Powell. As of last year, Mr. Powell said there were more than 800 brands competing and no single one has the lion's share of the market yet.

Last Thursday, pop star Beyoncé launched a line of athletic clothes of her owned called Ivy Park that will be available at retailers, including Nordstrom and Topshop, later this month.

While the overall sales of women's athletic apparel are growing at a fast clip of 19%, according to NPD Group, there are signs that the retail market for women's performance gear is slowing. According to SportsOneSource, which tracks traditional sportswear retailers and other national chains, sales of women's performance apparel are flat so far this year, after 3% growth last year.

"There is a lot more competition now. There are a number of new brands," said Neil Schwartz, vice president of business development for SportsOneSource. Its data don't capture international sales or direct-to-consumer sales, which have been a growing piece of business for Nike Inc. and others.

The big three performance brands -- Nike, Under Armour Inc. and Adidas AG -- which started out targeting men with high-performance materials, are turning their attention to the women's market, which they see fueling growth in the years to come. Under Armour recently hired new executives to lead its women's apparel and footwear divisions. CEO Kevin Plank in January forecast its women's business to eventually outsell its men's business.

Nike forecasts sales of women's products will roughly double by 2020, though its share of total sales will remain about the same. In its last fiscal year, women's gear accounted for 22% of Nike brand's $25.8 billion sales.

Its approach to women's gear remains performance oriented. In a statement, Nike said it begins its product design process by addressing technical needs for athletes, but "performance-inspired design doesn't mean sacrificing style, as how you look and feel are integral to how you play."

Meanwhile, Adidas' recently hired head of its women's segment, Nicole Vollebregt, is exploring new retail options, including getting its gear back in some of the shops at Equinox's gyms. The German sportswear company has brought in former Lululemon CEO Christine Day to help advise on retail strategy and collaborations with smaller brands in the women's business.

Its Reebok brand has teamed up with New York-based graffiti artist Upendo Taylor to make exclusive products for New York-based Bandier, a two-year-old boutique with locations in New York and Dallas.

National sportswear retail chains are struggling to get the model right for women's stores.

Foot Locker is paring back its Lady Foot Locker outlets to make way for a new model of bigger stores called Six:02. Dick's Sporting Goods Inc. has put expansion plans of its new Chelsea Collective boutiques on hold after it had to alter the merchandise in its initial two locations, according to a person familiar with the matter. The boutiques have been "helpful" in learning more about consumer tastes, Chief Executive Ed Stack recently said.

The moves seek to appeal to shoppers like Chelsea Lee, a magazine designer who works out at hip-hop dance classes at studios around Manhattan at least three times a week, who want more style in their gear. Ms. Lee said she frequently buys new sports bras but avoids pure-sports brands like Under Armour because they lacked the fashion factor.

"It sounds silly to say that they look so athletic, because I'm doing something athletic," Ms. Lee said, "but it doesn't look cool enough to me."

Write to Sara Germano at sara.germano@wsj.com

(END) Dow Jones Newswires

April 04, 2016 14:35 ET (18:35 GMT)

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