Analysts: Athletic Brands Aren't Making Enough Products For Women

One of the most noticeable shifts in women's fashion has been the embrace of athleisure and sneakers.

Still, many analysts believe the industry has significantly underperformed in serving the female athlete — and that the category could serve as a catalyst moving forward.

While female participation in sports is nearly on par with men, they still account for less than 30% of sales at the major global athletic brands, Wells Fargo analyst Tom Nikic said in a note earlier this month.

“We believe this disparity has been driven by a lack of focus on the female customer by the major brand, as the strong multiyear performance by female-oriented brands such as Lululemon and Athleta demonstrates an appetite for sportswear on the part of women,” the analyst said.

Women's Products Drive Results For Puma

Nikic did say the tide is turning — and increasing engagement with female customers will lead to strong growth for the athletic industry over the medium-to-long term.

Puma AG Rudolf Dassler Sport PMMAF has laid the groundwork for other brands to follow, he said.

The company's focus on the female consumer — starting in 2015 with its partnership with Rihanna — has brought the brand back to relevance and driven strong results over the past three to four years, the analyst said.

Adidas AG (ADR) ADDYY has followed suit, recently announcing a collaboration with Beyoncé, who Nikic said could reignite the women’s business, potentially adding a 300-basis point tailwind to consolidated sales growth next year.

Nike Inc NKE has already experienced an inflection in their women’s business, he said.

"We believe they can sustain momentum through a combination of female-exclusive sneaker silhouettes, increased focus on key women’s categories, compelling marketing and strong partnerships (e.g. the World Cup champion U.S. Women’s soccer team)."

Under Armour Inc UAA has worked hard to shift the perception of its brand as an overly masculine one, with its recent marketing efforts emphasizing the increasingly dual-gender nature of the product assortment, Nikic said.

Despite most of the major brands altering their strategy to appeal to the women’s side of the business, Nikic does not see this as a risk to the growth of a clear-cut women’s favorite: Lululemon Athletica inc. LULU.

"We believe it is a ‘rising tide’ situation that will benefit the industry broadly, and LULU continues to have a wide array of company-specific growth drivers," he said.

'Not Making Products For The Average Woman'

The brands that are doing best are vertically integrated, said Matt Powell, a sports industry analyst at The NPD Group.

They include Lululemon, Gap Inc GPS's Athleta, Old Navy and smaller brands like Outdoor Voices. They "really understand how the female athlete shops and what her needs are," Powell said.

A central issue in women's offerings has been a limited number of sizes, he said.

"Our data shows the average woman in the United States is a size 16. The industry has not been making products for the average woman."

Brands only offering small, medium, large and XL sizes are only addressing one-third of the available market, Powell said.

The company ThirdLove sells 76 bra sizes, Powell said — and most athletic brands sell just four.

An Opportunity In Footwear

Few brands make women's shoes, and those that do are largely successful, Powell said. Making women's shoes a smaller version of men's is a missed opportunity.

"The Fila Disruptor was aimed at the female customer and it was a huge win. With Puma, the Rihanna partnership really put them on the map. It showed them if they can make products specific for women they can win."

Skechers USA Inc SKX is geared toward female customers and is a big player the segment, he said.

Brands must create extended sizes, both plus and petite, and design products specifically for women, Powell said.

Another factor: finding the retail brand that can carry a product nationally.

In Powell's view, the best candidates are likely mid-market players like Kohl's Corporation KSS and Designer Brands Inc DBI.

Among the top-selling shoes of the last two years, the mid-market Nike Tanjun was sold primarily to women.

Overall, men’s apparel brands have a chance to capitalize on the growth potential of the women’s business, Powell said.

"They aren’t going to get to do by doing what they have been doing. They have to come out with product in a whole different way."

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