Is Athleisure to Blame for Foot Locker's Demise?
It looks like Foot Locker is the most recent athleisure vendor to succumb to an oversaturated market. According to Barron's, Quo Vadis Capital analyst John Zolidis attributes Foot Locker's fall to a surplus of inventory, and the fact that "athletic apparel and footwear is over-distributed."
More shocking, however, is Zolidis' claim that the real reason for the company's plummeting stock has everything to do with the fact that athletic apparel is on its way out. That's right—yoga pants and moisture-wicking apparel are no longer trending, according to the analyst.
He points to Under Armour, Big 5 Sports Goods and Lululemon Athletica as other examples that prove athleisure's dominance is coming to an end.
What common trait do all these companies share? They each sell product that depends on consumer interest and willingness to pay elevated prices for purported technical athletic features in apparel or footwear. This product was rarely used for its designed purpose. Rather, this very high-end athletic apparel and footwear was mainly worn casually. It was “cool” to wear yoga pants while shopping at Whole Foods or to be attired in moisture-wicking T-shirts while playing video games and sitting in class. The synchronized downturn in sales across all these companies tells us that this trend is over. The consumer has moved on to other things.
We're not sure that Zolidis' prediction is accurate. After all, the numbers show that athleisure is continuing to sell, and other retailers, like Nike, continue to see success with millennial buyers. Additionally, Amazon just launched its own athletic apparel brand, and the e-commerce giant doesn't toss its hat into the ring if the market is a plummeting pit of fire. There's still opportunities to be had, and the trick is to stand out in an oversaturated market. Perhaps Foot Locker is not doing enough to differentiate its stock from its competitors.