Sportswear: Bottoms on top

Non-denim pants and shorts lead sportswear’s surge.

Retailers have been happy to report a rebound in the sportswear business, with average increases in the high single digits and more of the same planned for spring 2012. “Our sportswear business is up around 8 percent since July 1, and men’s growth is outpacing store total!” says Tom Whitney, GMM at Darien Sport Shop in Connecticut.

Todd Epperly lists sportswear and footwear as standout categories at Halls in Kansas City, and Karen Murray at VF Corp. tells MR that the majority of Nautica’s retail accounts are ahead of plan and last year. “The health of the business has also improved year over year,” she says. Driving sales: knits, chino and twill bottoms in basic and fashion colors, and focused assortments of proven brands.

While most believe denim will never die (sales have been flat against last year), the category has recently seen legitimate competition from non-denim pants and shorts. Jim Murray at A.K. Rikks in Grand Rapids, Mich. told us, “We responded to the changing market and bought less denim and more colored bottoms for fall. We’re even doing well with cords.”

“For spring ’12 it’ll be chino and twill, a huge emerging category for us,” says Steve Birkhold, CEO of Lacoste, whose business is currently only 5 to 6 percent bottoms. “Then going into fall ’12 it will be a focus on chino and corduroy. On the denim side, we collaborated with Earnest Sewn and we’ve seen great success selling jeans in the $200 range. We’ll continue to develop that business since denim is the perfect accompaniment to our shirts. We’re making sure that our customers can buy the same fit in a jean, a cord and a twill.”

Vendors and retailers agree that we’re in the upswing of a knits cycle, and the importance of the category will only continue to grow. “We’re actually selling more polo shirts this year than we ever have, despite the fact that they’re a smaller percentage of our business than in the past,” says Birkhold. “We’re seeing comps in our full-price stores in the plus-17 range for the year.” In addition to trends in the marketplace, Birkhold attributes the success of the brand’s polos to a strong emphasis on slimmer fits.

For most retailers, knits, though performing well, are not yet outpacing wovens. Epperly says wovens sales at Halls are up slightly from fall ’10, but notes that trim and structured is overtaking the washed and worn look. Whitney says, “Our ratio of wovens to knits is 3 to 2. There’s nothing really new going on in wovens. Plaids, classic solid colors… similar to what has sold the last few seasons. For us, wovens average $120 retail compared to knits at $98.”

A lower ticket price doesn’t seem so bad when your business is doubling, as Jim Murray reports. “Last fall we started selling knits at almost double the previous year and it has not stopped. We bought heavier into knits right through the holiday season.”

“Fashion color short sleeve and long sleeve knits were among fall’s top sellers,” says Karen Murray. “So yes, we are in a knits cycle. Basic short sleeve knits were slower than planned, but premium/pieced knits were strong. We’re adding performance into our knit category in 2012.” Performance styles from Helly Hansen and Patagonia sold well at Darien Sport Shop, but Epperly at Halls warns that some brands are putting too many special features into garments for guys who are only wearing them “to look good going into Starbucks. The retails are ending up too high.”

In addition to the hot items, brands are helping drive sportswear sales. “Most of our retail partners are doing great,” says Birkhold. “Probably our best performance at wholesale right now is at Nordstrom, with business up 45 to 50 percent on the year. They’ve really figured out the formula. They don’t do big branded statements; they merchandise by classification but have done a great job of picking the winners, setting themselves up to succeed with more of a narrow assortment. It’s all about branded fashion basics.”

Whitney plans to grow his top performing brands rather than expand to new resources or categories. “We recently added Hickey sportswear and we’re also counting on growth from our 600 sq. ft. Peter Millar shop-in-shop.” Peter Millar quarter-zip sweaters and non-denim bottoms in blue and green from Vineyard Vines were Darien Sport Shop’s bestsellers this fall.

Record high temperatures across the U.S. in September and October may explain why sales of lightweight knits and pants have outpaced heavier knits and outerwear. “Cold weather coats and sweaters have been disappointing,” says Epperly.

“We wish the weather would cooperate so people would be more in the mood to buy fall pieces,” agrees Jim Murray.

DKNY was prepared for a warmer fall, offering unstructured hybrid blazers in coated cotton and cotton nylon, as well as a commuter Mac with button-off hood and magnetic fastenings and a lightweight nylon and leather bomber jacket, which men’s design director Garry Martin tells us have been among the bestsellers for fall ’11.

Though the menswear business is bouncing back more slowly than most would prefer, the industry has its sights set high for sportswear sales in spring ’12.

“We’re expecting a 10 percent increase,” Jim Murray told us. “We bought color for spring and expect that bright displays will provide our clients with something new to purchase.”

Contemplating Cotton

Cost increases on fall ’11 and spring ’12 product varied slightly by vendor, but most retailers did report having to pass some of the burden off to consumers. Whitney says shoppers at Darien Sport Shop haven’t noticed. “Our men’s prices are up 15 to 20 percent overall, but we haven’t gotten any resistance from customers.”

“We absorbed some within our supply chain, but just like every other brand we’ve had to pass some of it on,” admits Birkhold. “In July we took Lacoste core polos from $79.50 to $89.50, and the spring collection is up 6 to 8 percent in total cost.

“Most of our retailers have seen very little resistance because we’re not crossing major psychological barriers. If we were to take our polos above $100, it’d be a huge problem.” He adds that since slight increases have occurred across the board, most brands have been able to maintain price differentials with their key competitors. Epperly noted that a few of their vendors have crossed these unspoken thresholds, drawing concern from customers at Halls.

Though the price of cotton relies heavily on constantly changing economic conditions—not to mention unreliable weather trends—clothing manufacturers can bet on lower prices for the season ahead. “If you look back at the last 20 years, every time cotton prices have gone up they’ve gone back down fairly quickly,” Birkhold points out.

And, in fact, the price of cotton has decreased 49.21 percent over the last six months, from a high of $229.67 in March 2011. September’s average price per pound was $116.65, up slightly from $114.10 in August.

At press time, analysts predicted the continuation of falling prices due to increased crop availability from countries like Argentina, Australia and Brazil.

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