It’s that time of year again, when we fill out our March Madness brackets, only to see our office bragging rights go down the tubes when our national champion loses in the first weekend on a last-second three-pointer.
Besides the untold, technically illegal, millions of dollars at stake in betting pools across the country, the men’s college basketball tournament – like much of big-time sports these days – has become a huge draw that’s important for both the schools and corporate sponsors.
Not only will the entire basketball tournament draw around 800,000 spectators overall1, but the Final Four games regularly entice about 20 million TV viewers.2
The popularity of the games is yet another sign that our craziness for sports continues. However, it’s not just watching or participating in sports. Increasingly, we’re also dressing the part.
As a recent Business Insider article noted, the athletic apparel market is soaring, as gear and clothing makers target three key demographics: teens, young women and serious athletes.3
BI said teens are increasingly buying gear from Nike and Lululemon over denim classics from brands like Abercrombie, according to a recent Piper Jaffray survey on teen spending.
Activewear now comprises 28% of teen apparel purchases, up from 6% in 2008. Nike, Lululemon, Under Armour, and Adidas are the most popular brands for athletic apparel, the survey said.
Lululemon is expanding a sister brand called Ivivva for tween customers, and Adidas said it plans to work to be the go-to brand for teen athletes’ gear.
But it’s women in their 20s and 30s that are largely driving the trend in what is called “athleisure” – especially leggings to wear to the gym, on errands, and more and more, just about everywhere else.
Nike is expanding its womens’ line, which the company says could add $2 billion in additional sales by 2017, according to BI.
Dick’s Sporting Goods is launching a new line, Calia, with country singer Carrie Underwood, while Under Armour is offering more products to women.
As for the higher-end market, Adidas has plans to go after more serious athletes to regain market share, BI reported.
Adidas’ Reebok division is trying to win over “tough fitness” customers through partnerships with “high-intensity workout firm CrossFit and the grueling, muddy Spartan race,” according to BI.
The increased popularity of athletic wear also has had a hand in lifting the stocks of sports-related companies. The World of Sports motif has gained 3.4% in the past month. During that same time, the S&P 500 has lost 0.7%.
In the past 12 months, the motif has increased 23.1%; the S&P 500 has risen 14.3%.
In light of what could be a secular change in how we dress, optimism still exists that further upside may be in store for many sports-related stocks.
Barron’s recently suggested that shares of motif component Foot Locker could rise another 20%.4
Barron’s noted that on its recent quarterly earnings call, Foot Locker CEO Dick Johnson pointed to double-digit gains for basketball shoes in all regions, but said that the company’s “lifestyle” running shoes grew even faster.
According to Barron’s, that supports a claim Foot Locker has made in the past: demand is rising with a long-term shift in men’s tastes toward casual footwear, and not merely with a bounce in basketball’s popularity.
And women are buying, too. The company’s long-struggling Lady Foot Locker chain posted its third consecutive same-store sales gain in the fourth quarter—and its first double-digit one in years.
Whether more of us are truly athletes, or just dressing like it, this trend could continue to keep sportswear stocks in the game.
1Chart, “Total paid attendance at college basketball tournament games,” statista.com, http://www.statista.com/statistics/219650/ncaa-basketball-tournament-games-total-attendance/, (accessed March 16, 2015).
2Bill Keveney, “Nielsen ratings: NCAA men’s basketball final wins,” usatoday.com, April 15, 2014, http://www.usatoday.com/story/life/tv/2014/04/15/nielsen-ratings-week-of-april-7-mad-men-justified-mtv-movie-awards/7744017/, (accessed March 16, 2015).
3Ashley Lutz, “Athletic wear companies are going after these 3 types of people,” businessinsider.com, March 5, 2015, http://www.businessinsider.com/athletic-apparel-companies-customers-2015-3, (accessed March 16, 2015).
4Jack Hough, “Foot Locker: Still Running Fast,” barrons.com, March 6, 2015.