From Lululemon to Tracksmith, Sportswear Brands Face an Inflection Point
The Takeaway
- The sportswear industry faces an inflection point in 2026, creating openings for upstarts.
- Lululemon shares are down 44% in 2025 amid leadership fight.
- Under Armour’s struggles could make it an M&A target.
For Christmas this holiday season, I bought my mom a navy blue 1980 Lake Placid Olympics sweater. It has special significance for her because, as a college student in upstate New York at the time, she got to attend the famous “Miracle on Ice” hockey game between the U.S. and Soviet Union in person. Now, almost half a century later, my mom finally has some merchandise to commemorate it.
The sweater itself isn’t vintage, but a brand-new garment that I purchased from, of all places, Abercrombie & Fitch. The fact that a retailer best known for being the “it” brand for preppy teens in the late 1990s is now selling high-quality Olympics merchandise for boomers illustrates how vast the marketplace is for sports apparel these days. Abercrombie—which also has a deal with the NFL—is getting into lifestyle sports apparel just as establishment brands Nike, Lululemon and Under Armour, best known for performance sportswear, each navigate varying stages of their own crises.
The result is a likely inflection point for the broader sportswear industry in 2026. Below, my predictions for the year ahead in running gear, soccer jerseys, and lifestyle merchandise.
Varsity Blues
Let’s start with the tumult at the top. Nike is the worldwide leader in sportswear by sales. The company is currently in the “middle innings” of a turnaround, CEO Elliott Hill said on the company’s December earnings call. Nike hit its nadir in summer 2024, thanks to a combination of pushing too aggressively into direct-to-consumer sales while demand for staple products like Jordans and Air Force 1s dropped. The Oregon-based brand saw its worst-ever single-day stock drop as a public company, and replaced its previous CEO with Hill that October.
It also began repairing relationships with wholesale retailers like Amazon, which Nike had previously jettisoned, and Foot Locker, where it had reduced inventory. Those steps have contributed to a rebound in sales in North America, which were up 9% for the three months ended in November, compared to the same period last year.
But Nike’s biggest challenge remains regaining its sense of cool. For that reason, its release of a signature basketball shoe from WNBA phenom Caitlin Clark—expected this year—will demonstrate whether the swoosh still has swag. If the WNBA avoids a player strike this year and the launch goes ahead, I predict the shoe will get Nike back in the cultural conversation.
A tougher challenge may be a comeback for Under Armour, once seen as a possible challenger to overtake Nike as the biggest sportswear company in the world, with quarter after quarter of 20% revenue growth during the 2010s. The Baltimore-based company ultimately spread itself too thin: Under Armour in 2021 paid $9 million to settle SEC charges it misled investors about revenue growth, and also withdrew from some expensive college sports marketing contracts with University of California, Berkeley and UCLA. Most concerning is the brand’s top departure of 2025: Golden State Warriors guard Stephen Curry, whose own signature sneaker failed to translate Curry’s generational talent to brand—and sales—cachet. With UA shares trading under $5 and a market cap of about $2 billion, the company could be an M&A target this year.
The Yoga Pants Wars
Meanwhile, in the land of yoga pants and other athleisure, Lululemon is in the heat of crisis. Founder and erstwhile Lululemon CEO Chip Wilson launched a proxy fight for control of the company last week, days after activist hedge fund Elliott Management began pushing to install new leadership after it accumulated a stake reportedly worth more than $1 billion. Current Lululemon CEO Calvin McDonald has already announced plans to step down this month. With shares of the company down 44% in 2025, something clearly has to give.
How did the Canadian brand end up in such a slump? At its zenith, Lulu was the inspiration for a wave of fellow direct-to-consumer yoga brands like Alo, Outdoor Voices, Vuori and Kim Kardashian’s Skims (now in partnership with Nike). During the pandemic, the legions of people working from home only accelerated customer demand for comfy pants. Almost six years on, companies are pushing staffers to return to the office and demand for stretchy pants has softened. Meanwhile, outside of the office, baggy jeans have come back into style, making Lulu’s signature skintight leggings passé.
The leadership struggle at Lulu is likely to warp the company’s ability to innovate and respond to trends in the near term. Into this void, I expect cult favorite running brands Bandit, Satisfy and Tracksmith to grow. Boston-based Tracksmith has catered to the New England-prep aesthetic for over a decade, while Bandit (based in Brooklyn) and Satisfy (from Paris) have become wealth and status signifiers among cosmopolitan run clubs on both sides of the Atlantic. While none are anywhere close to Lulu’s $10 billion in annual sales, they’re only gaining in consumer credibility.
The Fanatics Question
It’s been just over three years since Fanatics was valued at $31 billion. Since then, the company has expanded into sports betting and the fraught and frenetic world of prediction markets, complementing its existing businesses of selling sports jerseys and trading memorabilia. Fanatics founder and CEO Michael Rubin told Puck in October that the company is “in no rush” to go public, particularly as the sports betting arm is not yet profitable. The company secured $700 million in debt financing in September.
Meanwhile, Fanatics has competition in the licensed apparel division. Sports behemoths like the International Olympic Committee and the NFL are inking deals with Abercrombie & Fitch and Lululemon, while U.S. Ski & Snowboard announced a collaboration with J.Crew ahead of next month’s Winter Olympics in Milano Cortina. Those deals indicate that major sports institutions are thinking creatively about their customer base beyond the mesh jersey-wearing sports bar clientele.
All that said, I’m still betting 2026 will be the year of Fanatics’s long-awaited IPO. Its private equity backers are itching for an exit. And regardless of who wins the AI race, investors will be hungry to diversify.