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From Luxury to Basics, Intimate Apparel Awash With Opportunity and Challenges

Increased availability of luxury sleepwear and loungewear products is a key trend that will drive the global intimates market over the next five years, according to a report from technology research and advisory company Technavio.

One of the main factors contributing to the growth of the sleepwear and loungewear sector, according to analysts at Technavio, is the focus on innovation in product design, product offerings and new categories.

Many new vendors are entering the luxury segment to offer premium products to high-end customers.

Lunya, for one, a U.S.-based luxury sleepwear company offers innovative materials such as cool, washable silk and pima cotton collections. The pima cotton sleepwear products are designed with Trans Dry and XT2 fibers that dry up to three times faster than regular cotton. Styles include pima long cardigans, robes and rompers.

Under Armour has introduced athlete recovery sleepwear. The soft, bioceramic print on the inside of the athlete recovery sleepwear absorbs the natural heat and reflects far infrared back to the skin, which helps people sleep better.

“Currently, the demand for visually-appealing sleep and loungewear is driving the market,” Technavio analysts said. “Although sleepwear and loungewear are worn inside the house, the preference for visually appealing products with better features is high. The availability of sleepwear and loungewear products that cater to different requirements, therefore, attracts customers. During the forecast period (2019-2023), many vendors are expected to launch new sleepwear and loungewear in diverse colors and styles.”

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As for current business, major manufacturers like Hanesbrands, PVH Corp. and Delta Galil are seeing ups and downs in the innerwear sector. Innovation in fabrics and product design is important, but the problems of U.S. retailing and global raw material price instability present ongoing challenges.

Gerald W. Evans Jr., CEO of Hanesbrands Inc., said on a recent conference call with analysts that the company’s U.S. innerwear sales fell 7 percent in the third quarter, below its outlook for a 1 percent to 2 percent decline.

“Our U.S. innerwear results were particularly frustrating this quarter, as our replenishment orders lagged, despite experiencing some of the strongest point-of-sales results across our categories that we’ve seen in years,” Evans said.

Raw material price increases have resulted in finished goods price hikes in the 4 percent to 5 percent range in Hanesbrands’ innerwear business, he said.

“We haven’t seen tremendous elasticity in this category,” Evans said. “In fact, increases were much larger back in the days of the cotton bubble (in 2008, when cotton prices reached $2 a pound), what we saw was that in times of rising prices, consumers tend to move to brands as re-assurance that when they spend their money they spend it appropriately. And in our category, we know that price is really a distant fit in the ways that they choose a product and brands and the things that brands deliver are most important.”

Discussing specific categories, Evans said men’s underwear revenue grew 5 percent in the period “as innovation drove market share gains and our shipments matched our point-of-sale.” In women’s panties, point-of-sale increased to the mid-to-high single-digit rates in the quarter.

Within the overall intimates sector, he said the company’s “revitalization plan is gaining traction,” although at a “more uneven pace than we’ve been anticipating.”

“Our market share is beginning to stabilize after multiple quarters of decline,” Evans said. “And point-of-sale trends are rebounding within the key accounts where we have re-launched with new product offerings. Most recently, we’ve seen progress in shapewear, where we introduced product resets in late August in two key accounts. Since the reset, we have experienced low double-digit point-of-sale growth as consumers reacted positively to our new product designs and innovation.”

At PVH Corp., chairman and CEO Manny Chirico said, “As we look to 2019, we expect the Innerwear business to be essentially flat, reflecting expanding shelf space in basics, the benefit from price increases, which have already been accepted by retailers, a conservative view on elasticity, as well as the complete removal of Sears from our forward outlook.”

Chirico called the Calvin Klein men’s underwear and women’s intimates business, “the crown jewel of our portfolio,” which he said “is just off the charts and you can’t help but walk in the store and just recognize that.”

Isaac Dabah, CEO of Delta Galil, said the company’s acquisition of Eminence Group “made a strong contribution to sales in its first quarter as part of Delta Galil,” while expanding its European presence.

Eminence brings to Delta Galil a men’s premium French brand that has the second largest men’s underwear market share in France, with products ranging from undergarments to polo and technical shirts to Eminence Tech+. Eminence’s Athena line adds a sporty and athletic mass market French undergarment brand. The transaction also included Italian brand Liabel, which brings strong brand awareness as a mass market T-shirt and underwear brand for the entire family.

“Also during the quarter, we signed a global licensing agreement to exclusively develop, produce and distribute Ted Baker men’s underwear, loungewear and thermal wear worldwide, with the first collection launching Spring 2019,” Dabah said. “This represents an important step in our ongoing strategy to grow our global portfolio of premium brands.”