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Market Overview

Rhone Looks To Pioneer An Underserved Premium Mens Activewear Category

Rhone Looks To Pioneer An Underserved Premium Mens Activewear Category

In the athletic apparel industry, numerous higher-end brands have emerged on the women's side of the business, but men’s options have largely been relegated to Nike Inc (NYSE: NKE), Under Armour Inc (NYSE: UAA) and adidas AG (ADR) (OTC: ADDYY).

These brands' price points are generally very close to one another, typically within 5 percent — leaving an opportunity for more premium male-oriented activewear brands to proliferate.

A Premium Menswear Opportunity?

Rhone, a Connecticut-based activewear startup, identified what it sees as a need and desire for a premium activewear brand tailored to men.

Activewear generates $44 billion in annual sales and is one of the fastest-growing segments in all of apparel, but premium men's activewear is an underserved market, according to Rhone co-founder and CEO Nate Checketts.

Checketts said he found over 50 female focused premium activewear brands at an average price index of 140-160 percent to Nike in a study, but almost zero brands for men in the same category.

“That led us to believe there was an opportunity in the premium menswear. Guys were being force-fed this choice of big box lower experience retail active and we felt like we needed another option,” Checketts said in an interview with Cowen.

Lululemon Athletica inc. (NASDAQ: LULU) has made an aggressive push in expanding its men’s business, targeting $1 billion in men's sales by 2020. Still, the men’s business makes up just 15 percent of Lululemon’s overall sales.

Rhone’s product lineup is similar to that of Lululemon’s menswear business, with high quality product and innovative fabrics, but Checketts said that with 85 percent of its sales coming from the women’s side, its competitor will never be as focused on the men’s side of the business.

Rhone's Product Strategy

Rhone developed a new fabric technology called GoldFusion, which the CEO said remains 98-percent effective at combating odor after 100 washes.

“The industry standard is 15-20 washes and lululemon is good until 50 washes. We have the only non-toxic, eco-friendly solution that is good up to 100 washes,” Checketts told Benzinga.

To date, the company has raised $13.5 million in venture funding and lists NBA champion Shane Battier as one of its investors.

Checketts argues that Rhone is using its size to its advantage to introduce newer fabrics and on-trend styles.

“The bigger players in the market are aware these technologies exist, but it is harder for them because they are so focused on wholesale and have a much longer supply chain calendar to bring these new technologies to the consumer."

Rhone is better-positioned to bring products to the market more quickly due to its size and direct-to-consumer focus, the CEO said.

'Smaller Brands Are Succeeding'

Cowen analyst John Kernan called Rhone a brand to watch in a recent note.

“We expect this brand to continue to gain share at the premium level across athletic apparel as its marketing is resonating across a wide range of men and the product is fashionable and also performs at a high level.”

NPD Group's Matt Powell said smaller footwear and activewear brands hold a market advantage, arguing that small is the new big  in his latest blog.

"Just as in athletic footwear, smaller brands are succeeding in the activewear market. These are the ones we should look out for this season," Powell said.

Checkett said casual trends in apparel and an increased consumer focus on streetwear and comfort mixed with style are favorable for Rhone.

“I consider ourselves to be in this performance lifestyle space. If you think of brands that are driven by streetwear and fashion like Supreme, or a Nike and Adidas, we are right down the middle and that’s right where we focus. Everybody is trying to come to this category, but this is where we started."

Related Links:

How Changing Trends Resurrected FILA As A Fashion Brand

A Post-Sneaker World: How 'Small' Footwear Brands Are Beating The Giants

Photo courtesy of Rhone. 


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