The active wear market is on fire! And now the big kids are coming out to play. Looking to break into the $31-billion market, Gap Inc. has announced plans to buy Athleta Inc. for $150 million, a bargain when you consider how much cash they can end up making in this deal. And since Athleta has been around for 11 years already, they’re also buying a pre-fab consumer base. Bonus! Why build from scratch when you can buy customers ready-made? Apparently one finance dude even suggested that the Gap band of accountants approached Lululemon itself in a bid to buy its way into the market, to which, we assume, the Lulus responded, “pfffflllbbt.”
However, because of the Gap’s merciless ubiquity, Athleta will surely be a major competitor, eating into the Lulubird’s profits with price points 15-20% lower. Plus J Crew’s newly launched yoga line and mega brands like Nike and Adidas digging into the yoga world hard, will only make for greater threats. Hooray for diversity in over-priced yoga pants!
Oh, and Athleta’s business, currently existing through catalog and online sales, will be folded into the new Gap website that combines all the brands -Old Navy, Banana Republic, Piperlime- and shipping costs. Yes, the internet, that elusive and profoundly lucrative frontier Lulu has avoided all this time, but will soon give in to next year – a move we predict will boost short-term sales, but will ultimately tarnish the Lulu “secret club” intrigue which has been it’s appeal thus far – when the yogarazzi drop the brand for the next elitist trend.
Gap Buys Its Way Into Athletic Wear [The Globe and Mail]