NEW YORK, October 24, 2018 /PRNewswire/ --
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Commentary
In his upcoming book Little Black Stretchy Pants,
Lululemon Athletica Inc. (NASDAQ:LULU) founder Chip Wilson reflects on the athleisure trend
that sparked an apparel revolution. Today's field of athleisure
players expands beyond Wilson's outfit, including serious
challengers such as RYU Apparel Inc. (TSX-V:RYU)(OTC:RYPPF),
Gap Inc. (NYSE:GPS), Nike (NYSE:NKE), and Under
Armour (NYSE:UA), each offering investors an array of options
to ride the athleisure wave.
According to Forbes "The Athleisure Trend Isn't Taking a Rest"
thanks in part to the "sports leisure" segment's dominance across
product categories. The athleisure trend has worked its way through
clothing and cosmetics, including long-lasting and waterproof
makeup designed to make people look good prior to, during, and
after working out.
It's not just in the US that athleisure is taking over.
According to a report published by Allied Market Research, the
global activewear market is expected to reach nearly $547 billion by 2024.
Meanwhile, typical athletic wear isn't growing at the same rate.
Consumers today want fashion with function, driving brands to offer
higher quality products that consumers are willing to pay more for.
This is the basis for RYU Apparel Inc.'s
(TSX.V:RYU)(OTCQB:RYPPF) line of urban athletic
apparel that is challenging the athleisure space by offering
quality products these discerning consumers can afford.
Sustainable Growth In A Hot New Marketplace
Amid a field of familiar names, RYU Apparel Inc.
(TSX.V:RYU)(OTCQB:RYPPF) is establishing itself
in gyms and on the field of play as a name synonymous with quality.
The result has been a proven growth trajectory, one validated by
its revenue numbers which have doubled each year since 2016:
- $1.36 million in 2016
- $3 million in 2017
- $6+ million projected in 2018
- $ 40+ million projected by 2020
For comparison, RYU outsold Lululemon and Under Armour COMBINED
over their first two years ($4.5
million vs $2.4 million).
In addition to its sustainable growth, RYU's expenses have
consistently dropped each year since 2017. As expenses relatively
drop, RYU can expand more efficiently, having already launched new
Outerwear, with plans to release Swimwear, Underwear, Footwear, and
Accessories in the future.
RYU Apparel Inc.'s (TSX.V:RYU)(OTC:RYPPF)
sales margins have stabilized around 46%-48% over the last years,
which the company expects to improve upon once economies of scale
are reached and new product lines are unveiled. The award-winning,
Vancouver-based company has
already opened its first American store in Venice, California earlier this year and three
more stores will open before the Holiday season -fitting with its
plan to double its retail footprint consistently through 2022.
In the world of fashion and lifestyle, high-profile endorsements
are integral to brand success. RYU Apparel Inc.
(TSX.V:RYU)(OTC:RYPPF) interviewed pro athletes, Olympians, and
urban amateur athletes in order to design quality products destined
for heavy usage. The company holds 22 patents on its products,
including the innovative design of its RYU Locker Pack, which keeps
its shape despite cramped quarters.
RYU's design process has resulted in a long list of celebrity
endorsers including Riverdale's KJ
Apa, Aquaman's Ludi Lin, The Walking
Dead's Alicia Witt, and NHL players
such as Shea Theodore, Alex Tuch, and Morgan
Reilly. The company has even received the endorsement of the
Jeremy Bieber Group, including social media promotion from
superstar Justin Bieber.
Quality Over Quantity - Changing the Rules of
the Game
While many of the larger retail names such as Macy's and H&M
are taking a hit on profit margins due to huge volumes of unsold
inventory, innovative retailers such as RYU Apparel Inc.
(TSX.V:RYU)(OTC:RYPPF) are taking a different approach. RYU
keeps its product lines and inventory streamlined with less than
100 SKUs, and no stock in holding. The result is a drastic
reduction of liabilities, leading to a higher profit margin.
All of RYU's products are designed and tested by its CEO,
Marcello Leone, whose hands-on
approach has led the company to increase its quality on every
single item. Leone's attention to detail includes washing pieces
150-200 times, just to see if they retain their fresh look and
feel. RYU Apparel Inc.'s
(TSX.V:RYU)(OTC:RYPPF) design process is so well regarded that
the company recently had to defend its trademark after Lululemon
allegedly infringed on the company's brand.
RYU Apparel Inc.'s (TSX.V:RYU)(OTC:RYPPF)
dedication to innovation is one of its greatest advantages over
others pursuing the athleisure trend. Where others are playing
copycat, RYU has set a course for explosive growth by creating
products that directly solve the issues athletes have had with
previous "performance" products.
Competitors in the Athleisure Space
Nike's (NYSE:NKE) response to the
athleisure revolution has included a rapid expansion toward
athletic wear for women. Nike is increasingly concentrating on the
women's athleisure market, promoting its athleisure lines as both
fashionable and comfortable. The company's prominent athleisure
innovation has been its AeroReact material, which can quickly
detect when the wearer is about to start sweating and has the
ability to loosen itself before the onset of sweating.
Gap Inc. (NYSE:GPS) officially ramped up its entry into
the athleisure game through the launch of its new sportswear brand
for men called Hill City. Hill City offers all the necessary
pieces, including running shorts, multi-sport shorts, a light
training hoodie, and a heavier one for everyday use, as well as a
wide selection of t-shirts. Where the Gap hopes to innovate is
through its outdoor offerings, like a three-layer shell and its
Sherpa fleece jacket.
According to Lululemon Athletica Inc. (NASDAQ:LULU)
founder Chip Wilson, the
aforementioned Gap made a bid to acquire Lululemon in the early
2000s. Wilson criticized the Gap's $200
million buyout offer at the time, citing it was
"inadequate", leading to the Gap's buyout of Athleta, Lululemon's
competitor for $150 million. Today,
Lululemon is still a leader in the athleisure space, despite
recently losing a legal battle with RYU Apparel Inc. over trademark
issues stemming from Lululemon's alleged use of RYU
innovations.
Under Armour (NYSE:UA) has taken its own approach to the
athleisure market, opting to cater to men with a "Protect This
House" tagline that helped foster growth after the company's
exposure to pro football audiences. CEO Kevin Plank has continued to successfully lead
Under Armour, maintaining a focus on the importance of the
athleisure market, citing the sports lifestyle segment as the
company's largest opportunity.
For a FREE research report on RYU Apparel Inc.
(TSX.V:RYU) (OTCQB:RYPPF), visit
Microsmallcap.com.
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