Athletic Wear Companies Target Sporty Women
Stephanie is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Women who wear girly sunglasses socialize. Women who choose sunglasses from Oakley exercise.
That's the message of the spring ad campaign for Oakley. In the ad, which actually does read, "For exercising not socializing," a woman clad in exercise gear strolls in front of two socializing diners, wearing a pair of Oakley sunglasses. The message is clear. Oakley sunglasses are for women who work out. The same message is seen in an Oakley athletic wear ad, which reads that the company's clothing is for running, not running errands.
Oakley's parent company, Luxottica (NYSE: LUX), knows eyewear. When the company purchased Oakley in 2007, it was already an established company, owning such big-name brands as Ray-Ban and Sunglass Hut. Since Ray-Ban has an established women's line, the company likely saw value in beefing up its women's store, which advertises sunglasses for sports, swim and surf, and "lifestyle," which looks suspiciously like the "socializing" the company eschewed in its campaign.
Perhaps, Oakley is wise to listen to its parent company. In its most recent quarter, Luxottica reported a 10% increase in net profit year-on-year, reaching $280.5 million. The company recently began making sunglasses for Giorgio Armani, a deal the company's CEO predicted could bring in as much as EUR200 million ($265.52 million) in coming years.
Competing for female shoppers
Luxottica has steep competition if it wants to try to win the American female shopper away from competitors like Lululemon Athletica (NASDAQ: LULU) and Nike (NYSE: NKE). Both companies have long been reaching out to sporty females. Lululemon, in particular, has been a stock market darling in recent months, with revenue rising 21% to $345.8 million in its most recent quarter.
The company boldly goes after the female athlete, focusing specifically on feminine yoga clothing. Specializing in this small segment of the female customer base has allowed Lululemon to thrive.
However, a snafu with see-through yoga pants earlier this year, combined with the exit of CEO Christine Day, makes Lululemon an uncertain investment. In fact, the company has boldly stated that the recall of the flawed pants will cost it $40 million in profits during the fiscal year.
A true classic
One company that could teach both Lululemon and Luxottica a thing or two is Nike. The company has long included women in its marketing, launching a series of ads just last year celebrating pioneering athletes. The company also set an entire site aside for its women's brand: NikeWomen.com.
The company reported fourth-quarter earnings of $0.76 per share, which was up 27% year-over-year, beating estimates. The company's total revenue came in at $6.7 billion, up 9% from the previous year.
However, soon after its earnings announcement, Nike lowered its earnings forecast for the year, citing low revenue in China as the reason. The company has noticed declining revenue in the country, which accounted for 9.7% of the company's revenue in its most recent fiscal year.
Interestingly, in 2012, Nike wowed women with a series of ads that celebrated a positive body image. The ads went viral, but as it turned out, the ads weren't from Nike. They were based on a real ad campaign that lounged in obscurity.
The fact that the campaign went viral in 2012, however, should serve as an example to Lululemon and Oakley of great female-oriented marketing. Oakley has a long way to go in appealing to the fitness-minded woman, but since women buy the majority of household goods in a household, the company might be wise not to limit itself to athletic women.
The outlook for Nike isn't positive in the short-term, as the company admits itself. If it can provide a way to offset its losses in China, a new phase of outreach to women might not be a bad idea. Lululemon, meanwhile, will have a long way to go in making up for a $40 million loss due to its recall. For the remainder of 2013, Luxottica may be the most promising stock, especially since its deal with Giorgio Armani is expected to bring in big earnings.
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Stephanie Faris has no position in any stocks mentioned. The Motley Fool recommends Lululemon Athletica and Nike. The Motley Fool owns shares of Nike. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!