The North Face FuseUno performance jacket is constructed from a single piece of HyVent Alpha 3L fabric

The North Face FuseUno performance jacket is constructed from a single piece of HyVent Alpha 3L fabric

Innovation in materials and performance in the outdoor apparel and footwear category is on the increase as enthusiasm for technology grows, a recent industry conference highlighted.

Salt Lake City was the host of this year's Outdoor Retailer trade show, where retailers, manufacturers, suppliers and winter sports industry professionals gathered to discuss the latest innovations and technology.

Cowen Research analyst John Kernan noted in his Athletic Footwear and Apparel Brands industry update that the category remains healthy and that leaders like Under Armour, North Face and Timberland will capitalise.

Trend spotting
“A plethora of outdoor and athletic brands were in attendance, including those that we cover such as Under Armour and VF Corp’s The North Face, Timberland and Lucy brands. We also had the opportunity to sit in on an NPD presentation on ever-evolving consumer trends.

“It was clearly evident from the brand booths we stopped by and chatted with reps that innovation and technology are the buzz words. Everyone we talked to was eager to chat up their latest innovation, ie. lightweight, breathable, warmth retaining, and we sense that demand creation budgets could see an uptick year-on-year in calendar 2015 in order to explain the innovation and points of differentiation.”

The North Face showed at the event that it is further evolving and extending some of its powerhouse technologies launched in the past two years, including Thermoball and Fuse Form. The former imitates down but retains heat when wet. The latter is a process of fabric construction that enables different weights and strengths of fabric to be placed is certain areas, without the use of seams.

For autumn 2015, ultra technology is extending to The North Face’s winter footwear. Mountain Athletic apparel was also highlighted, along with transitional wear.

“Management commented that orders are above expectations,” Kernan noted. “Timberland is launching a new campaign, 'Made for the Modern Trail', in 2015, once again geared to Timberland’s outdoor lifestyle. Footwear AURs will move slightly higher, reflecting product costs and improved channels of distribution.”

Kernan pointed out that colour and prints continue to be substantial trends in outerwear, footwear and activewear. He said a number of brands also spoke of improving segmentation within distribution and working with their retail partners on the importance of merchandise presentations to communicate the brand experience.

Nike, Under Armour and VF Corp often comment on this topic, creating emotional connections or elevating emotional messaging with consumers, and are investing behind it both in brand communication and merchandise presentation,” Kernan said.

Under Armour white space
Under Armour used the event to primarily focus on the introduction of its new 'Fat Tire' line of outdoor footwear, its largest launch in outdoor. The shoe, Kernan said, is a “halo” of various technologies, to be used primarily for outdoor and trails, and includes a Gore-Tex boot with Storm 3 level waterproofing, a Michelin sole, Boa lacing system and Cupron inner sole odour resistance.

The first style of this shoe, a high-top, will launch in the autumn, followed by a low-top version in spring 2016 and will retail at US$199 for the high-top.

“The enthusiasm of the Under Armour booth was quite evident,” Kernan noted. “We estimate Under Armour's outdoor business at only $250m in revenues with potential to multiply exponentially.

Management commented that its outdoor growth is outpacing Under Armour growth overall and there is a lot of white space to capture. Distribution doors continue to open up, particularly among the outdoor authentic independents and Under Armour outdoor indicated that its order book exceeded expectations with roughly 90% of account visibility.”

The company is due to report is fourth-quarter results on 4 February. In October, it upped its full-year guidance as it revealed an increase in third-quarter earnings and sales.

VF Corp innovation
“VF’s The North Face has technology infused in its DNA and this was quite evident across its product lines for 2015. While no new technology per se is being launched for 2015, instead The North Face is further evolving/extending some of its powerhouse technologies launched in the past two years, including Thermoball and Fuse Form. In footwear we saw the Ultra line, which was launched a year ago. For fall 2015, Ultra tech is extending to The North Face’s winter footwear, expanding on its potential usage beyond just winter and into fall.”

Global expansion of the North Face, Vans and Timberland creates a sustainable trajectory of improving gross margin and return on invested capital, Kernan believes.

“VF Corp will likely make another acquisition in the coming years to add to its portfolio of brands. It has significant competitive advantages which include manufacturing nearly 33% of its product in its owned factories, and owning significant expertise in the supply chain, as well as management's focus on outdoor action sports brands and ability to reinvest significant amounts of cash flow to innovate product and acquire a deep knowledge of their core consumer.”