Nike and Lululemon Athletica Report Impressive Growth Despite Pandemic

By Thomas Price Thursday, October 1, 2020

As the COVID-19 pandemic still pushes on through many countries across the globe, it has led to many closures of physical stores and fitness centers. These closures have had a major impact on the many brands that specialize in fitness and sports-based apparel. As a result, many of the industry’s premier brands have struggled to create consistent revenue throughout 2020. However, some brands have found new avenues for revenue, while others have embraced online sales in order to continue doing well. While 2020 has not been a good year for the fitness apparel industry, some brands are more equipped than others to make major rebounds in the coming months and years as the industry as a whole seems primed to continue to expand far into the future.

The State of Major Brands in 2020

With very few exceptions, numbers in athletic apparel are down almost across the board in 2020. Adidas and Under Armour have struggled significantly in keeping revenues up, with both companies posting poor numbers in their most recent quarterly reports. Adidas saw only $3.94 billion in their most recent quarter, a steep drop off from the year before, equating to a 36.36% decline in revenue compared to 2019. For 2020, Adidas is down 11.2% in total revenue generated. Under Armour has seen an even worse drop in sales than Adidas, reporting only $708 million in their most recent quarter, which translates to a staggering 40.62% decline in revenue. The decline over the course of the entire year is also higher than Adidas at 13.78%.

Some companies have found more creative ways to stay ahead of the decline associated with the ongoing pandemic. With a focus on athleisure wear and online sales, Lululemon Athletica and Nike have not been hit nearly as hard as their direct competitors. Nike, in its most recent quarterly report, saw its revenue reach $10.59 billion. While the revenue did diminish from the same quarter in 2019, it was only by .62%. This can be largely attributed to the strong sales Nike has seen online. Despite the mass closures of physical stores, Nike’s digital sales nearly made up for the entire portion, surging by 82% in the most recent quarter.

Nike’s success in the face of the pandemic is impressive, but not quite as impressive as Lululemon Athletica. While Nike only slightly decreased in sales, Lululemon Athletica actually increased during the most recent quarter. The company saw its revenues rise to $903 million, which was higher than the same quarter in 2019 by 2.22%. The increase in sales can be attributed at least in part to the increased focus Lululemon Athletica has put on athleisure apparel. Additionally, comfortable clothing has been particularly popular during the pandemic, due to the large number of people staying home. In fact, the athleisure market is predicted to continue to grow from $155.2 billion in 2018 up to $257.1 billion in 2026. One of the largest names in that industry is by far Lululemon Athletica.

Sports/Athletic Apparel in the Future

While many different brands have struggled greatly in 2020, the outlook for the future still remains extremely positive. The estimated value of the entire market in 2026 stands at around $248.1 billion, which would be up from $167.7 billion in 2018. This would translate to roughly a 4.6% compound annual growth rate (CAGR) over the years specified. The rise of athletic apparel comes from the growth in popularity of fitness overall in recent years as well as the explosion of popularity in the apparel in the Asia-Pacific region, which is set to outpace the overall compound annual growth rate of the market with a CAGR of 6.8%. While men hold the highest number of direct sales, the demographic which will see the most growth over this period of time will be women, who will have a compound annual growth rate of 5.6%.

The outlook on the market as a whole suggests that even companies that have not done well in 2020 will still likely see growth over this period of time due to the immense growth of the industry as a whole.

Final Conclusions

2020 has been an incredibly difficult year for businesses in the athletic apparel market. Companies like Adidas and Under Armour have seen revenues and profits dwindle from near-record highs in 2019 to significant lows this year. Without physical stores and with the closures of many gyms and fitness centers, maintaining sales has become increasingly difficult. However, Lululemon Athletic and Nike have demonstrated that, with proper adaptation, weathering the pandemic-related drop is possible. Bolstering digital sales and putting more focus on athleisure has led to both companies performing relatively well despite the economic downturn.

The major point from 2020 is that even those who failed to adapt will most likely see a return to larger sales in the coming years simply due to the expansion of the market as a whole. This year was an outlier for the industry and not a sign of things to come as it has been for the fossil fuel industry and cable television.

About the Author

Headshot of Thomas Price

Tom Price is a writer focusing on Entertainment and Sports Features. He has a degree from NYU in English with a minor in Creative Writing. He has been previously published for Washington Square News, Dignitas, CBR, and Numbers on the Boards.

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