2XU eyeing Asia’s health-conscious middle class

2XU is launching the next phase of its goal to become a billion-dollar brand by expanding its China presence.

Hawthorn-based sports apparel company 2XU is launching the next phase of its ambitious goal to become a billion dollar brand by expanding its presence in China next year.

The company will be hoping to cash in on China’s love affair with everything health related, following the $1.6 billion takeover of vitamin maker Swisse just up the road by a Chinese company.

Emulating the success of niche performance brands like Lulu Lemon and Under Armor, 2XU has capitalised on a sense of community among elite athletes and weekend warriors, but it might be a trend toward sportswear as fashion that could propel it into the stratosphere.

A report by US broking house Piper Jaffray this year revealed that upper-income teen girls are increasingly favouring stretchy athletic pants over denim. Activewear now composes 28 per cent of teen apparel purchases, from 6 per cent in 2008.

With revenue on track to reach nearly $150 million this year, that’s an enormous opportunity for 2XU’s recently appointed chief merchandise officer, Mark Delahunt, who previously worked for Nike in Japan and the US.

“It’s almost like the rules are off,” he says. “It doesn’t matter if you wear a performance apparel piece to a formal function. Globally, we are higher [indexed] with women than most brands. It’s been very popular with young females. Tights are massive now for girls. We’re right in the middle of it.”

2XU built the business on high-end compression wear for athletes, partnering with the Australian Institute of Sport and RMIT to design and manufacture clothing that compresses parts of the body to improve blood flow for recuperation.

Co-founder Aidan Clarke says that focusing on the performance needs of elite athletes started as a niche but will ultimately pay dividends.

“At the elite level of sport, everyone knows who 2XU is and because elite athletes are wearing it, then the top trainers start recommending it. The highest paid actress in the world, Sofia Vergara, is seen wearing it because her trainer is a fan; Hugh Jackman is always in our tights on social media.”

The company is still committed to the technical apparel that led to it supplying 29 out of 30 NBA teams and three-quarters of the NFL in the US and the Navy Seals.

It is now working on compression wear with silicon imprinted onto the fabric to minimise fatigue in muscles during exercise, something that could help older athletes.

“They’re starting to work out that at a weekend warrior level you hurt yourself more, you aren’t as aerobically capable so it’s not just recovery, reducing fatigue has a big benefit for exercise,” Clarke says.

He said investment and expertise from the L Capital — the venture capital arm of LVMH — was helping it gain a foothold in Asia, where an increasingly health conscious middle class was buying into the exercise craze.

He said there weren’t plans to seek a US listing but given there were stakes in the company held by L Capital and Lazard, it could happen “at some point.

Going for Growth is a The Australian series, presented in partnership with NAB, championing Australian business success stories