The athleisure trend is still alive and well. It’s all too convenient for many to go from the mall, home or office to the yoga studio or gym without changing. Given the resilience of today’s leading athleisure brands (especially those in yoga wear), it’s not hard to view the athleisure industry stocks as timeless and considerably less vulnerable to those week-to-week changes in fashion.
Undoubtedly, various pieces of clothing can be subject to those 52 “seasons” in a year, but not when it comes to athletic apparel. And with that, let’s dig deeper into the athleisure industry stocks in this piece to see if they’re still worth bets.
If one company bears most of the responsibility for the rise of the athleisure trend, it’s Lululemon (NASDAQ:LULU). The Canadian yoga wear company made it “cool” to wear its apparel, not just in the yoga studio but just about anywhere. Over the years, LULU stock has continued to surge at an incredible pace. Surprisingly, the athleisure trend hasn’t faded since the pandemic lockdown days when it became the norm to wear casual attire while working from home.
Lululemon clothing always seems to be in fashion, so consumers may have enough reason to justify $100+ for a pair of pants. Undoubtedly, Lululemon’s margins are enviable. Not many big names in athleisure can command such lofty prices and still sell relatively well in an economy that’s not exactly scorching hot.
Though Lululemon’s latest guidance hike (the company now expects earnings per share between $4.96-5.00 for Q4) was applaud-worthy, the stock wasn’t really rewarded. Indeed, there was a lot of expectation priced in during the 2023 year-end rally, perhaps too much.
Although LULU stock is backpedaling so far in 2024 (down 5.4% YTD), we shouldn’t expect it to shift into a downward dog pose anytime soon. Athleisure is still alive and well, as too is demand for all things with the Lululemon logo on them.
The only thing more shocking than Lululemon’s impressive 2023 has to be the continued underperformance of Nike (NYSE:NKE). The stock seems to have taken a round-trip right back to $100 per share. And though the sub-par macro environment and consumer-spending headwinds have negatively impacted demand for footwear, it’s just weird to witness other athleisure firms (like Lululemon, which also makes its own sneakers) making higher highs as Nike stock struggles to gain air.
I can’t help but wonder if new athletic apparel entrants are starting to gain market share over the legendary sneaker giant. Even as Lululemon and other footwear firms gain traction, I can’t say I’m ready to give up on Nike quite yet. It’s been struggling, sure, but there are many ways the company can break out of its funk and catch up to its peers, some of which are enjoying new highs right now.
In the meantime, the stock trades at 30 times trailing price-to-earings (P/E), a somewhat reasonable valuation for a firm that many analysts expect won’t stay grounded for long. Perhaps a rebound of the bruised Chinese economy could lift Nike, as regional sales could use a jolt.
Many investors see Skechers (NYSE:SKX) as more of a sneaker pure-play versus the likes of a Lululemon or Nike. Though it sells athletic tops and bottoms, just like its rivals, I view the footwear business as the show’s main star.
The stock has been an incredible performer in the past two years, surging around 53% on solid product demand. With more budget-friendly footwear offerings than rival Nike, Skechers seems like a better way to play a consumer under pressure. That said, I don’t think Skechers is thriving just because the economy is lukewarm.
Over the years, Skechers has done a fantastic job of marketing itself as more than just a budget brand of shoes. Recently, the company inked a deal with Ukrainian football player Oleksandr Zichenko (that’s soccer, not American football) in a deal that could jolt international appeal for the Skechers brand. Additionally, Skechers has been investing a great deal in so-called comfort technologies.
Improved designs, new brand ambassadors and top-of-the-line comfort are why I believe SKX stock has been and will continue running at full speed.
On the date of publication, Joey Frenette did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.