Gap Inc. to debut men's athleisure brand

Dive Brief:

Gap Inc. on Thursday announced the mid-October launch of Hill City, a high-performance men's athleisure brand with apparel that can go from "working out to work to weekend." It's the first new brand Gap Inc. has rolled out in more than a decade, according to a note from Wells Fargo emailed to Retail Dive.
The brand will be found online at hillcity.com, with some items available at 50 Athleta locations, the company's activewear brand for women, according to a Gap Inc. press release.
Hill City has been designated a B Corp certified brand, manufactured using high-quality renewable, recycled fibers, the company also said.

Dive Insight:

Gap Inc.'s upcoming men's activewear brand is a clear challenge to Lululemon, and could be a necessary step in its growth objectives.

Lululemon first innovated athleisure designs for women, and has maintained its preeminence in a category that's turned out to be one of the most competitive in apparel retail. Lululemon has weathered quality and public relations snafus in recent years, as well as the recent ouster of its CEO, and has touted its sales to men as a key growth factor. Until now Athleta seemed content catering to women and tween girls (the last a category from which Lululemon has retreated somewhat).

But the line, acquired by Gap Inc. a decade ago, has been holding its own at a time when growth at the company's lower-priced Old Navy brand has overtaken its flagship Gap brand. Athleta, like Lululemon, is becoming known for performance fabrics, many of them proprietary, and generally beats Lululemon on price.

The company is counting on activewear to stoke sales, last year unveiling a growth strategy that entails store openings focused on Athleta and Old Navy locations, with closures weighted toward the Gap brand and Banana Republic. In Gap's most recent quarter Athleta gained market share, accelerated its growth rate "and is progressing well against our $1 billion sales objective," CEO Art Peck told analysts last month, according to a transcript from Seeking Alpha.

The launch of Hill City takes advantage of Athleta's success, according to GlobalData Retail Managing Director Neil Saunders, who has previously criticized the company for leaving the men's activewear business on the table. "Athleta has been one of the company's success stories, but the lack of a menswear offer has always been a point of weakness and a lost opportunity, especially since it is a growing part of the market," he told Retail Dive in an email, noting that the decision to run it as a separate brand is "sensible." Starting with e-commerce and a few Athleta stores could help by giving the brand a testing space, according to Saunders.

But Athleta, founded in 1998, also built its brand well before it was in Gap's stable, and that puts Hill City at a disadvantage, according to Jonathan Smalley, CEO and founder of operations performance management tool Yaguara . "For GAP to have a hope of success, particularly at price points that appear to be similar to Lululemon, Kit and Ace, Prana and many other more established brands, they will need to leverage data from its existing brands, their ability to produce quality apparel cheaper, at higher scale, and hope to get lucky with marketing that hits a new audience or that is meaningful enough to bring customers over," he told Retail Dive in an email. "In short, GAP is fighting an uphill battle with their new brand and a lot of things will have to fall into place for there to be long-term success."