11. February 2021 | 12:13 CET
Adidas, RYU Apparel, Zalando - Athleisure look: not only look good, but perform well too!
Over the last few years, the artificial word "athleisure" has become accepted as a term for sports and functional clothing worn in everyday life, also known as urban or activewear. The sportswear industry (Athletic Apparel Industry) is dominated by Nike, followed by the strong number two Adidas. Puma and Under Armour are other well-known players. Also, there are many still small, innovative and dynamically growing companies attracting more and more attention. And one industry is benefiting from any new trends in Corona times: mail order.
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ISIN: CA74979J4072 , DE000A1EWWW0 , DE000ZAL1111
ADIDAS AG - Here, Athleisure means Sports and Loungewear
Adidas was a remarkably consistent growth stock until the Corona crash in March 2020. However, since the price crash, it has been on a steady upward trend again, even if the previous year's level has not quite been reached. Adidas, like its fiercest competitor Nike, was late to jump on the athleisure trend.
The world's number two in the industry sells its fashion somewhat coyly under the terms sports and loungewear. In the meantime, however, casual fashion has become an essential part of the product range. Corona in particular and the associated lockdowns are likely to have led to a significant increase in demand for athleisure clothing. As a result, this market segment has performed better than average overall.
Long-term investors can now add an excellently positioned and consistent growth stock to their portfolios at a relatively low price.
RYU APPAREL INC - Forward with old hands and fresh money
RYU Apparel Inc, founded in 2008, is the manufacturer of urban sportswear in the Canadian sports and apparel metropolis of Vancouver. At the turn of the year, Cesare Fazari, CEO since March 2020 of RYU Apparel Inc, announced various course-setting measures for 2021. These plans included the successful raising of nearly CAD 6 million in additional capital and the formation of various strategic partnerships, including with Zoom Media (indoor advertising in gyms), Afterpay (payment service provider for top retailers) and Branded Entertainment Inc. (product placement in the top television series "The Count").
Having succeeded last year in attracting top personnel such as Grant Matzen (wholesale, formerly with Under Armour, Vans and Quicksilver, among others), James Chapman and Andrew Parr (both for golf, the former once with Perry Ellis and Callaway), RYU has now been able to sign Rob Blair as COO. Blair, who has more than 20 years of industry experience, including at Nike, GAP and Lululemon, is a transformation specialist tasked with implementing the visionary growth strategies outlined by CEO Fazari. These strategies include the new e-commerce store RYU.com, which is expected to increase the online sales share.
Launched this year and described by the Company as Phase 3 of the growth plan, it is expected to boost RYU's sales to more than CAD 1 billion by 2030. With a current CAD 40 million market capitalization, this is an ambitious goal, but not an impossible one when considering some competitors' development in this field. Given the excellent prospects, the current share price is an invitation to buy.
ZALANDO SE - Corona: Scream with happiness!
Corona has turned out to be a lucky break for the mail-order business. While the trend towards ordering goods, especially clothing, was already growing strongly in recent years, Corona has provided an additional kick. Never have more goods been ordered than in the lockdown phases during the pandemic.
Among others, the German clothing and shoe mail-order Company Zalando SE benefited from this in particular. The online retailer increased its sales in the third quarter of 2020 by a whopping 22% to just under EUR 1.85 billion. At the beginning of the pandemic, the group was able to release provisions in the amount of EUR 35 million after the spring and summer collections sold exceptionally well. In addition, Zalando wisely relied not only on its own web store but also steadily expanded its digital partner programs. This was reflected in the share price: after plummeting by more than a quarter to just under EUR 30 in March 2020, the stock has since more than tripled in value. The question is whether the Germans will continue to order their goods on the Internet after the end of the Corona restrictions or whether a new appetite for stationary retail will set in.
With a P/E ratio of over 100, the stock certainly doesn't seem cheap at the moment. On the other hand, analysts expect the P/E ratio to fall to below 30 by 2024. So, it's still a bet that risk-tolerant investors can take with a view to the development of other mail order companies.