BasketBall Banks on Fashion

JENNIFER ERNST

Tired of getting fouled by the low-profile trend, several players in the basketball market have a new strategy for dealing with stalled sales: fashionable, lifestyle collections.

Whether it’s companies eschewing performance altogether or brands bowing new low-profile lines, more athletic firms are seeking to capture a piece of the red-hot casual market.

And they have good reason to get into the casual game, where sales are projected to reach $3 billion this year, while basketball revenues continue to post sharp declines. (According to SportScanInfo, basketball sales are expected to hit $2.5 billion this year, a 20 percent drop from 2006.)

While some analysts are skeptical about the
viability of basketball lifestyle, a number of companies think it can jump-start sales.

Portland, Ore.-based Adidas — which signed an 11-year agreement in April 2006 making it the official uniform and apparel provider for the NBA — unveiled its newest collection of shoes for basketball star Gilbert Arenas late last month, and it puts the emphasis on fashion.

“I was always into finding shoes to pair with [my] jeans,” Arenas said at a recent launch event in New York. “I would skip school to get them. I was always the first in line.” But Arenas added that now he sees a disconnect between basketball shoes and fashion. “You have your basketball shoes that are too big, with your jeans that are too small,” he said. “I don’t think the kids are into it as much today.”

Arenas’ new collection, the Gil II Zero, will be his on-court shoes for the season. The line will comprise 20 styles — 18 of which will be limited releases that will be unveiled throughout the year. In terms of appearance, the shoes are a departure, as well — low-cut and branded with many of the athlete’s favorite things (such as Halo 3, Undrcrwn and Coke Zero).

The fashion end of the performance basketball business has been done, said Travis Gonzolez, head of global basketball public relations for Adidas. “[Customers] want a shoe that doesn’t scream technology.”

In fact, as Gonzolez pointed out, the Gil II Zero collection is just the latest in a series of steps the company has taken to capture more of the fashion-casual business within the basketball category. The company’s Remix collection — reissues silhouettes from the company’s 1980s and 1990s performance lines in new colorways and materials — launched this January. The first shoes in the collection were updates of the popular 1991 court shoe EQT B-Ball, and based on the sales response, the company plans to expand the line.

But Adidas isn’t the only one looking at lifestyle. Aliso Viejo, Calif.-based And 1, a division of American Sporting Goods, launched its basketball-inspired Hoop Life collection this fall.
“And 1 was always about street and style, and [the Hoop Life collection] follows that same path, but it plays into the colors and material stories that are working very well in the marketplace,” said Tom O’Riordan, CEO of And 1.

The new line debuted with eight styles, which accounted for 25 percent of the company’s overall bookings for fall and 30 percent of international bookings, O’Riordan said. His company expanded the line with six new styles for spring, with six more slated for fall ’08.

Meanwhile, some brands are skipping performance altogether and going straight to fashion. Founded in 2005, Philadelphia-based Undrcrwn launched its first shoe style, the Layup, for spring ’06; while it took styling cues from basketball, the fit and detail were all dress.

“We looked at being a lifestyle company first, like a fashion house, using basketball as our inspiration,” said Dustin Canalin, co-founder and lead designer of Undrcrwn.

“There’s a whole other culture of basketball, people who don’t play it but who like the culture — the music, the shoes. We appeal to the basketball audience, not the players,” he said.

There are indications at retail, too, that looks with a basketball lineage may be what consumers want. In its latest conference call, Indianapolis-based Finish Line Inc. said that sports-style footwear revenues were up during the quarter. Chairman and CEO Alan Cohen called out sport looks from Nike, Puma, Adidas and Lacoste, among others, noting that they accounted for 20 percent of men’s footwear revenue for the chain and 40 percent of women’s.

In fact, Finish Line cited particular strength in what might be the first, and most popular, basketball lifestyle shoe. “The Jordan brand continues to increase as a percentage of our total basketball offering,” Cohen said. “This product clearly crosses over from performance to lifestyle.”
Foot Locker, too, pointed to casual product as one bright spot in a tough period during its second-quarter call in late August. “Our strongest sales percentage increase came in the sandal, canvas and brown shoe categories,” said Chairman and CEO Matt Serra, adding that “the classic footwear categories ... are continuing to sell well.”

But analysts aren’t sure that lifestyle looks from basketball brands are the answer.
“[These shoes] are a cleaned-up skate shoe that they’re calling basketball,” said Sam Poser, an analyst with Sterne Agee & Leach. “These basketball brands, they’re stuck and they all want to find a basketball business, but there’s no room for error these days.”

Matt Powell, an analyst with SportsOneSource, agreed. He said two-thirds of the basketball business was driven by the fashion customer, and fashions have changed. “[The lifestyle approach] is trying to hang onto something that isn’t there by trying to spin it as a fashion story,” Powell said.

But there is at least one bright spot. Both Poser and Powell noted that the downswing in basketball should end in the next year.

Likewise, And 1’s O’Riordan thinks there’s still life in performance basketball — but he’s not waiting for it to come back. “We’re a year away from when that [performance] part of the business will pick up, and this [lifestyle] part will get stronger and stronger until the turnaround.”

Foot Locker, for one, is clearly banking on basketball: its House of Hoops retail collaboration with Nike is set to open in 2008, and the company has said the store will carry a lot of the lifestyle-friendly Brand Jordan product, as well as more performance-oriented product.

Finish Line, too, saw the light at the end of the tunnel. “While we are not quite prepared to say that the turnaround has arrived, we are encouraged by the results we are seeing in the category,” Cohen said on the call.

But one thing everyone agrees on is that timing will be everything. “People are wasting a lot of time and money trying to bring it back right now,” Poser said. “Everybody’s getting impatient. But this, too, will pass.”

Gonzolez agreed. “You’ll see basketball picking back up,” he said. “It’s on the fashion roller coaster; it goes up and down and up and down. But basketball’s not going away.”