In the running

You would be forgiven for assuming that 2024 was a rough year for the sportswear industry. News headlines repeatedly turned to the downgrade in Adidas’s China business, as well as executive reshuffles at Nike and the drop in the sportswear giant’s revenues, marking its worst downturn in a decade. Yet the poor performance of the sector’s major players doesn’t represent the industry at large. For some, it’s quite the opposite, says Erwan Rambourg, global head of consumer and retail research at hsbc. “The leader has been experiencing so much pain and there’s a tendency to project Nike’s performance as a proxy for the sector,” says Rambourg, who sees the past year as relatively healthy when it comes to course-correcting inventory levels and promotional spending.

Sportswear’s current dynamic is best described as a dichotomy between the incumbents and the challengers. On one side, household names Nike and Adidas find themselves at very different stages of recovery; on the other, newer and smaller upstarts are snapping up market share across categories including technical footwear and performance wear. The leaders in the latter camp – such as On, Hoka and Salomon – are doing just fine. This is evident when you walk down a prime shopping street, from New York’s Madison Avenue to London’s Regent Street – large spaces previously occupied by contemporary fashion labels have now been taken over by the likes of On, Californian performance-wear labels Vuori and Alo or Canadian outdoors specialist Arc’teryx. Inside boutique gyms, the usual abundance of Nike swooshes and Adidas’s signature striped leggings have been replaced by sleeker, logo-free gear and Salomon’s xt-6 lace-up trainers. With consultancy firm McKinsey & Company predicting that the global sportswear industry will grow by 7 per cent a year by 2027, there will be more growth opportunities up for grabs. “It has been an incredible year of growth,” says Joe Kudla, founder and ceo of Vuori, which is known for its comfortable sweatpants and matching workout sets. The brand, which started 10 years ago from Kudla’s garage, has recently raised $825m (€779m) and has been valued at $5.5bn (€5.2bn). As a comparison, Nike is valued at more than $114bn (€107bn) – more than double that of the next-biggest player, Adidas.

Kudla recently travelled to London to celebrate the opening of Vuori’s new shop on Regent Street. This is the brand’s first flagship outside the US but won’t be the last, given its current pace of growth. The plan is to have 100 shops stateside by 2026 and 50 in other countries in five years. Vuori began as a men’s concept when Kudla, who at the time was getting into yoga, had trouble finding high-quality workout clothes that he didn’t want to change out of immediately after exercising. “The market was dominated by the big sports brands and they defined the look and feel of our category,” he says. “It was shiny synthetic materials, big brand logos, bright colours. It was more aligned with playing sports than it was living life outside sport.” The brand went on to add womenswear to its offer in 2018 and the category has grown to represent half of its sales.

Kudla maintains that, though Vuori has eaten into market share previously held by the likes of Nike and Lululemon, it doesn’t need bigger players to fail for his brand to grow. Indeed, the global athleisure market is projected to have a 9.3 per cent compounded growth rate to reach $663bn (€626bn) by 2030, according to Grand View Research.

But it’s a competitive market segment and the expansion of upstarts such as Vuori or Alo is often considered to be one of several downside risks for legacy players. At Nike in particular – which last December slashed its outlook for the fiscal year and predicted that sales would only grow by 1 per cent – stale launches, overexposed heritage designs and an overzealous wholesale strategy, followed by an abrupt retreat, made way for innovative younger brands to shine. Nike veteran and ceo Elliot Hill, whose return in October 2024 was celebrated by employees, has a mammoth task on his hands: a turnaround that necessitates rebuilding the brand’s wholesale network; launching fresh, innovative new shoes to excite shoppers; and reinvigorating the sleepy Nike brand as a whole.

Sporting goods expert Matt Powell, who serves as an adviser at bce Consulting and Spurwink River, says that Hill is the man for the job. “Nike’s problems are fixable and Hill is the right person to fix Nike,” he says. “But none of these problems are quick fixes. While we might see green shoots in 2025, I don’t expect we’ll see the brand really turning around.” Bernstein analysts say that Nike’s product pipeline won’t show signs of revival until the first half of 2026 at the earliest. As for Adidas, it’s a little further down its recovery journey but it will still need to exercise caution next year, especially when it comes to hit styles such as the Samba, which have become oversaturated.

On the other side of the fence, what Nike has done wrong mirrors what the upstarts have done right: designing innovative products in neglected niches and nurturing wholesale relationships alongside their own shops. Then there are strategic tie-ups. Asics’ long-term deals with fashion-forward labels such as Cecilie Bahnsen and Kiko Kostadinov are a prime example. Unlike the flash-in-the-pan collaborations of years past, these crossovers feel in line with the brands’ identities and are generating more demand. When done right, they also reward both parties: niche fashion brands get access to new categories and technical supply chains, while sportswear players benefit from fresh creative direction.

For Salomon, which is owned by Amer Sports, the fashion angle is top of mind too. The brand, which has inked crossovers with Comme des Garçons and mm6 Maison Margiela, is doubling down on its fastest-growing Sportstyle category by opening its first shop, in Paris’s hip Le Marais, stocking limited-edition collaborations and signature styles such as the xt-6.

Powell also uses the example of New Balance, which is using collaborations to reintroduce archive designs while keeping commercial styles readily available to meet trickle-down demand – see its collaboration with Aimé Leon Dore, which raised the profile of its classic 550 trainers. Beside the New York-based fashion brand, New Balance has also been working with the likes of Miu Miu on a series of sell-out redesigns of its 530 and 574 sneakers, as well as Japan’s Junya Watanabe, with which it teased a trainer-loafer hybrid at Paris Fashion Week in January 2024.

Looking ahead, the sportswear sector will continue to evolve. A flurry of sporting events in 2024, from the Olympics to the Euros, reminded us that in an on-demand world, sport is one of the few things that will still grasp our focus live and en masse. Luxury brands are tapping in, creating opportunities and competition for existing sportswear players: see lvmh’s €150m Olympics deal and the French conglomerate’s decade-long Formula 1 partnership. This momentum will continue, particularly as interest in women’s sports gains ground.

Nike and Adidas aren’t going anywhere. According to rbc Capital Markets, the rivals still hold a quarter of the global sportswear market. But walls in sports shops and department stores are already looking different than they did five years ago, mirroring the market’s splintering. Despite both Adidas and Nike’s incoming rebounds, Powell doesn’t see a return to those brands’ previous domination. For new establishment trainer makers, such as On and Hoka, longer-term growth is on the horizon if they manage the marketplace well and create covetable clothing – a category that neither has truly cracked. “The big trees in the forest have lost foliage so the sun is finally reaching the ground and green shoots are popping up,” says Powell. “It’s great for the industry. The more competition we have, the better it’s going to make everybody.” — L

Nikolaj Hansson
Founder, Palmes

Copenhagen-based label Palmes is one of the upstarts honing in on sportswear niches and snapping up market share. Since it was launched in 2021, the brand has made a name for itself with its tennis-inspired clothing.

The brand’s founder, Nikolaj Hansson, was recently named creative director of Italian heritage sportswear brand Diadora’s Legacy line but his focus remains on tennis.

Why did you choose the focus to be on tennis with Palmes?
I don’t think that the big companies really cared about tennis. There seemed to be no need to innovate because they were catering to a very conservative audience. But now a lot of my friends in New York who used to skate are into tennis. It has opened up culturally and the idea with Palmes is to break down that barrier. We’re growing healthily, and we were profitable as of last year, which was only our second full fiscal year.

What have the bigger players been missing?
Emotion – that’s what we’re all buying into. It’s tough when you’re bigger to have the same sense of identity but it’s about communicating stories and feelings with depth, while also not taking anything too seriously.

What are the biggest challenges for sportswear brands today?
There are markdowns, which are hell. Some of our autumn/winter collection is already marked down during the mid-season sales but we’re only a few months into the season. It’s also about being aware of the world: we have so many issues with US imports because of the trade barriers. Everyone’s swimming against the current.

What do you make of the increased interest in tennis?
We’ve been really lucky with timing but we’ll keep doing exactly what we’re doing if the trend passes. I’m kind of excited for it to be over because there will be less noise. People will always move on to the next trend but tennis will always be relevant. Down the line, we would like to do another label for performance tennis wear.

Where’s your favourite place to play?
The Courts. It’s a hotel near Palm Springs with courts that have views of the San Ysidro mountains.

Joint ventures
Asics’ revival

Asics has raised its profile and increased demand for its classic styles, such as the Neocurve, thanks to collaborations with fashion-forward labels, from London’s Kiko Kostadinov to Copenhagen’s Cecilie Bahnsen, which added floral appliqués to the classic Gel Terrain trainers. The fashion labels get to experiment with materials, while Asics refreshes its creative direction.

Raising the heart-rate
Salomon wonders

It has become impossible to enter a gym without spotting Salomon’s sleek xt-6 trainers. The brand is becoming a go-to for both fitness enthusiasts and fashion-forward clients, and the firm is doubling down on its Sportstyle category, with new dedicated shops in Paris’s Le Marais and London’s Soho. Look out for limited-edition styles by mm6 Maison Margiela and Comme des Garçons.