The activewear market is booming right now, and is expected to grow faster than fashion overall for years to come. And yet somehow, the category’s biggest players seem to be constantly in crisis.

Last week saw running shoe upstart On’s stock drop as it told investors it would grow sales by a mere 26 percent in the first quarter (while most companies would be thrilled with that number, On’s been on such a hot streak it counts as a disappointment). Under Armour founder Kevin Plank unexpectedly reclaimed the CEO role amid a bumpy turnaround. Li Ning was reportedly considering taking his namesake brand private. The less said about Allbirds, the better.

The common thread here is that the hot new thing quickly becomes old news. At the same time, the cost of reinvention can be staggering. Where a fashion brand can refresh itself with a new silhouette or a smart marketing campaign, activewear customers are often looking for new materials and performance-enhancing design, both of which are expensive.

This week, Nike and Lululemon, the two biggest activewear companies by market capitalisation, report results for the fourth quarter of 2023. Both have pinned their future success on innovation.

Nike is beset by problems to a degree not seen in decades. Sales are expected to grow a paltry one percent in its current fiscal year, which ends in May. The brand relies on a handful of classic styles to keep consumers hooked, with diminishing returns, and recent marketing campaigns have fallen flat. Nike’s professional sports business is also mired in controversy, with Major League Baseball players complaining about cheap-looking jerseys and see-through pants, and FC Barcelona threatening to walk away from a 25-year partnership.

This week is all about hitting — and preferably beating — that already low growth target (setting aside the pandemic and the 2009 recession, you have to go all the way back to 1999 to find a year when Nike performed so poorly). Chief executive John Donahoe, who has talked up innovation as the key to Nike’s turnaround plans (seriously, he used the word 20 times in the company’s December earnings call), will also need to show that R&D is resulting in products consumers actually want, and not just uniforms baseball players hate.

Lululemon almost has the opposite problem – it’s performed so well recent years that it’s becoming challenging to dream up new ways to grow. First there was the pandemic, which normalised the idea that athleisure could, and should, be worn everywhere. A big push into menswear also paid off.

The company will give its 2024 guidance along with its results, and investors will be looking to see if it can keep up the ambitious pace of recent years. That will depend on some old-school retail strategy – investment in bigger, better stores and category expansion – but also that elusive idea of innovation. Lululemon is constantly introducing products it says are better-performing, and better for the planet. To cite one example, the brand last month introduced a prototype for a shirt made from recycled nylon, and says it plans to transition all of its nylon apparel to recycled or renewable sources by the end of the decade. The question is whether consumers want any of that, or if the athleisure mindset has fully taken hold, in which case the smaller, trendier Alo Yoga becomes an appealing option.

You’d rather be Lululemon than Nike right now. But both companies are proof that, like sharks, even the biggest sportswear brands have to keep moving to survive.

The Week Ahead wants to hear from you! Send tips, suggestions, complaints and compliments to brian.baskin@businessoffashion.com.

Supreme will launch its first standalone store in China, as well as a WeChat Mini Program, on March 23rd, a key milestone in the streetwear juggernaut’s global expansion plan following an early foray into the country via a shop-in-shop at Dover Street Market’s Beijing outpost in 2022.

Chinese hypebeasts have long clamoured for a local Supreme store, but the brand’s efforts to enter the key fashion market were stymied, in part, by the rise of sophisticated opportunists who opened fake Supreme flagships from Shanghai to Shenzhen and attempted to register the brand’s trademarks in the country.

The move comes as demand for streetwear cools and some observers ask how far counterculture Supreme can grow without going mainstream and losing the ‘street cred’ that made it so desirable in the first place. In the year ending March 2023, the brand generated revenues of $523.1 million, down from $561.5 million the year before.

Learn more:

Is Streetwear Still Cool?

Luxury brands may have pivoted away from sneakers, puffer jackets and hoodies, but new labels like Corteiz and Free The Youth are making a case for street culture’s enduring relevance in fashion

On Mar. 15, Judge David Hurd of the US District Court for the Northern District of New York sided with Sephora on its motion to dismiss the lawsuit brought by New York resident Lindsey Finster.

The fourteen-page response stated that the plaintiff failed to “plausibly allege any of the claims contained in her complaint,” which accused Sephora of seven violations including fraud and breach of warranty over its “Clean at Sephora” designation.

The ruling stated that nowhere in Sephora’s definition of “clean” did it state that products were free of all synthetic or harmful ingredients, but rather was clear that its designation was explicitly described as containing products formulated without specific ingredients.

“Plaintiff’s complaint leaves the Court guessing as to how a reasonable consumer could mistake the ‘Clean at Sephora’ labelling and/or marketing to reasonably believe that the cosmetics contain no synthetic or harmful ingredients whatsoever,” read the judge’s ruling, adding “nowhere on the label or in the marketing materials plaintiff cites does defendant make any claim that the products are free of all synthetic or harmful ingredients.”

The ruling also stated that Finster included “a laundry list of synthetic ingredients found in ‘Clean at Sephora’ cosmetics that she claims have been known to cause irritation or other human harm,” but “does not allege that these are the same ingredients that Sephora claims are not found in its ‘Clean at Sephora’ cosmetics.”

The dismissal of Finster’s complaint included leave to amend and refile by Mar. 29.

Learn more:

Sephora Responds to Claim Its Clean Beauty Programme Is Anything But

The LVMH-owned beauty retailer asked a federal judge to dismiss a lawsuit alleging its “Clean at Sephora” designation is false advertising.

DUBAI — The last time I touched down in Dubai back in 2015, the question I was asked over and over again was whether the Emirati city-state could become a global fashion capital: could it make the leap from being a mere consumer of fashion to a creator of fashion, bringing together the critical elements of a fashion industry ecosystem, from education and design, to manufacturing, finance and technology?

Back then, the big four fashion capitals — New York, London, Paris and Milan — still dominated the industry, and it seemed like a long-shot for Dubai, better known for conspicuous consumption than industry clout, to become a fashion hub of this stature.

Eight years later, much has changed on planet fashion.

London and New York, while still on the map, have lost ground as global fashion capitals. While London continues be the training ground for the industry’s top creative talent (Chemena Kamali and Seán McGirr who debuted this season as creative directors at Chloé and McQueen, respectively, were both educated at London’s Central Saint Martins College of Art & Design), the city has been losing ground as a major fashion hub for years. Now, the implosion of Farfetch and Matches, and ongoing troubles at Net-a-Porter, have eroded London’s position as a hub for technological innovation in fashion and placed huge pressure on the city’s independent designers who rely heavily on them for scale and global distribution.

Across the pond, the challenges faced by America’s department stores have put similar pressures on New York’s independent brands. At the same time, the city’s one-time status as the industry’s commercial capital has waned, as Parisian mega-brands — Chanel, Dior, Louis Vuitton and Hermès — have surged to previously unimaginable scale.

Meanwhile, Shanghai, which had taken the leading position in the race to become the fifth global fashion capital, has become increasingly cut-off from the rest of the fashion industry amid growing geopolitical tensions, a slowing economy and a lingering sense of insularity after Covid lockdowns.

But the very notion of a fifth fashion capital may be a thing of the past. In a globalised world, the fashion industry, too, is more global than ever and the concept of fashion capitals may be shifting from a handful of citadels (which Shanghai or any other city might join) to a wider system of hubs, each with its own specialisation, orbiting one increasingly dominant centre: Paris.

Milan (and now Mumbai) specialise in offering high-quality manufacturing, London produces top creative talent, Seoul and Los Angeles churn out brand ambassadors. And Paris, truly the world’s fashion capital, is where it all comes together.

So where does this leave Dubai? That was the question on my mind as I sat down with more than a dozen fashion professionals last week — several of whom were expats who had come to Dubai for six months only to find themselves still there more than 10 years later — to learn more about life and the behind the scenes of the fashion industry in this city.

Before it was an international metropolis, Dubai was a fishing village. As vice president, prime minister, minister of defence, and now absolute ruler, Sheikh Mohammed bin Rashid Al Maktoum was instrumental to this transformation, helping to create companies like Emirates Airlines, Jumeirah Group and DP World, and real estate developments like the Palm Islands, Burj Al Arab and Burj Khalifa, establishing Dubai as a global brand.

As one person said to me, Sheikh Mohamed’s original direction to close advisors developing his vision for 2020 was not to think of Dubai as a city, but to think of Dubai as a business. That pragmatic mindset is evident in everything you see and hear happening in the city.

While the city has suffered significant setbacks, notably during the financial crisis of 2008, it’s back to blistering growth, buoyed by relatively low cost of living, advantageous tax rules and its decision to remain open to the world during the pandemic. In 2020 alone, the city’s population surged by 5.6 percent, making it one of the fastest growing cities in the world, now home to more than 3.6 million people.

There’s no doubt Dubai is creaking under this growth spurt. Everything used to be 20 minutes away. Now it’s more like 60, with gridlock to rival Los Angeles.

But Dubai is extraordinarily global and diverse in a way that I have not experienced anywhere else in the world. Emiratis only make up about 10 percent of the population, with more than 200 other nationalities represented. This was fully on display one night at the ninth anniversary party for La Faubourg du Cantine, the Dubai outpost for the original Parisian restaurant which closed in 2006, where I felt like I had been parachuted into the future. Not only was there a sense of openness and optimism that is hard to find these days in New York, London and Paris, there was also a global mix of culture where multiple languages were spoken interchangeably and music by a live band veered from 90′s R&B to classic Parisian show tunes to which everybody seemed to know the words. It was a vibe.

Part way through my trip, locals began warning me that a man-made rainstorm was coming, part of a “cloud seeding” programme run by the government that brings much needed hydration to this desert city. Then I received an alert on my phone advising me to stay home on Saturday, the day I had set aside to visit the city’s two expansive shopping malls, Dubai Mall and Mall of the Emirates. The next day, I woke up and parts of the city were flooded because there were no drainage systems to handle the torrential sheets of rain.

I decided to venture out anyway as it was my last day in town. Nobody else seemed to have heeded the warnings either. When we arrived at Dubai Mall, it was almost impossible to find a parking spot and the mega brand stores were heaving with customers. Dior, Chanel and Hermès were all doing brisk business. Quiet luxury brands Loro Piana, Zegna and Brunello Cucinelli were very busy too.

For many of these luxury brands, their Dubai Mall store is their number one store in the world, while the Middle East makes up roughly 10 percent of global sales, and growing. But that doesn’t mean the customers are all locals. Of course there were Emiratis, but also lots of Russians (many of whom seemed to have moved here after the war in Ukraine broke out) Indians and Western expats. It’s no wonder that for many luxury fashion brands, Dubai is where they meet a wide and unique cross-section of their global customers in one place.

As for its place among the world’s fashion hubs, Dubai may still be mostly about luxury consumption, but it is also emerging as the dominant hub for brands keen to engage with the wider MENA region, including the high-potential Indian market, only a two hour flight away. Condé Nast has opened an office here, with expectations that it is going to take back its licences for Vogue Arabia and GQ Middle East in order to operate them directly and reap more of the profits.

There are also fashion schools, including a two year-old outpost of Istituto Marangoni and FAD which is expanding its own course offering in the Dubai Design District in the coming months. And, yes there are more and more homegrown businesses like Rami Al-Ali’s couture, The Giving Movement’s activewear, Nadine Kanso’s Bil Arabi jewellery and Sole DXB’s trade shows that are making a global fashion impact.

So, yes, while at times, Dubai can still feel like being on a different planet from the rest of the fashion world with its Blade Runner-like city-scape, giant shopping malls and man-made storms, and while its global ambitions will never be fully realised until it confronts its record on human rights, it is also a place that is constantly changing. In some ways, Dubai is a window into the future of fashion as power and wealth shift Eastwards, seeding opportunities for fashion creativity and entrepreneurship to flourish far beyond fashion’s traditional capitals.

This Weekend on The BoF Podcast

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Last year, when I visited Cairo I visited a unique store concept called Maison69, the brainchild of Amir Fayo, whose underlying philosophy is to create retail and hospitality concepts rooted in culture and connection.

This week on The BoF Podcast, I sat down with Amir to discuss his unique personal history; his innovative and emotive approach to retail, and the philosophy that underpins it.

Imran Amed, Founder, CEO and Editor-in-Chief, The Business of Fashion

P.S. Limited in-person tickets remain to join us next week on March 22 at the BoF Professional Summit in New York. Save $100 off the full ticket price, using code BoFTECH100. Purchase your ticket now.

Plus, here are my other top picks from our analysis on fashion, luxury and beauty:

1. How Zara Is Beating Shein. By investing in an elevated product and shopping experience, Spanish retailers Inditex and Mango are seeing tremendous growth despite fierce competition from the likes of Temu and a cash-strapped consumer.

2. The Strategy Behind Miu Miu’s Explosive Growth. How did Miu Miu grow by 58 percent last year? CEO Benedetta Petruzzo breaks down the plan that has powered eye-popping acceleration in a slowing luxury market.

3. Nike’s Latest Sports Headache, Explained. FC Barcelona may take its on-field kit and fan merchandise in-house after falling out with Nike. Football industry executives and rival sportswear brands will be watching its next moves closely.

4. Lightning in a Bottle: Tapping Into the Niche Fragrance Boom. With independent perfume on a hot streak for investments and acquisitions, the fragrance market is only growing larger — and more competitive. Here’s what steps emerging brands need to take as they expand.

5. What’s Driving the Influencer Subscription Boom. As social media users tune out ads, content creators are putting more of their content behind a paywall. The hope is they can build a deeper connection with their followers – and make more money, too.

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