2020 has so far been a terrible year for sportswear brands.
Adidas and Puma both saw their Q1 profits fall by 97% and 61% respectively. Under Armour reported a drop of 23%, with a further drop in Q2 to as much as 60%. Forcing UA to look for a way to back out of their $280 million deal with UCLA.
However, one sportswear brand that is on the up is the Liverpool based Castore. Who last week marked another major milestone in their journey, by launching their first foray into soccer with Scottish giants Rangers.
Start-Up
Unlike many of the global sportswear brands they aim to challenge, Castore is still far from a household name.
However, Castore has achieved high-profile successes since being launched by Liverpudlian brothers Tom and Phil Beahon, in 2016.
Both brothers came from a sporting background, with Phil playing semi-professional cricket for Lancashire. While Tom played soccer for Tranmere Rovers and Spanish side Jerez.
"Phil and I are both former athletes; he was a cricketer and I was a footballer. Pursuing our passion for sport meant intensive training, and living in sports clothes, day-in and day-out,” explained Tom.
The brothers would ultimately decide to end their sporting careers when they realized that they would be unable to reach the highest levels, in their respective sports. Instead, they would pivot and set a new dream for themselves.
Their vision was to create a new luxury sportswear company. However, they had the significant hurdle to overcome that they had no idea how to make clothes. Furthermore, they had no contacts in the industry.
Undeterred, they went to mills in Italy and Switzerland, and factories in Portugal, just knocking on doors and hoping that someone would listen, offer advice, and support their vision.
Amazingly, their plan worked. "We went to these mills and factories knowing nothing about clothes manufacturing, but we were passionate about what we wanted to create, and people responded to that," said Tom Beahon.
Using their own savings, and funding from entrepreneur Sir Richard Branson's Virgin StartUp scheme, the brothers launched Castore clothing online.
“Our ultimate vision for Castore is to create a premium alternative to Nike or Adidas,” says Tom Beahon. “We want to build Castoreinto a brand that has a global scale and is respected across the world for our dedication to creating the highest-quality sportswear in the world and having a deep, deep passion for sports.”
Through its e-commerce site, Castore would record annual revenues of $15.6 million, by 2019.
“One of the main benefits of being a digital-first brand is that it is almost as simple to acquire a customer in Hong Kong, Singapore or Tokyo as it is in London,” said Tom Beahon. “To capitalize on the huge opportunities out there makes complete sense and our business is set up to do that.”
Success continued to follow the company as they partnered with 2016 Wimbledon winner Sir Andy Murray (@andy_murray).
Unlike most sportswear companies that approach high profile athletes to try to get them to wear their brand, Castore had a different experience. After Murray's fitness coach had started wearing Castore tennis clothes, he reached out to the Beahon brothers. After a few meetings, Murray would join Castore as a shareholder, while also becoming his official supplier.
"We are incredibly excited to be partnering with an athlete of Andy's caliber whose drive, commitment and competitive spirit have transcended tennis and inspired a generation of future British athletes. Andy embodies the Castore ethos of Better Never Stops, we immediately shared a joint vision on how to move the brand forward.
“Our goal is to build Castore into the world's leading premium sportswear brand and the partnership with Andy represents a major step to achieving this vision. We are very proud to be a British sportswear brand and extremely excited about the opportunities this new relationship with Andy encompasses,” said Tom Beahon.
When Andy Murray announced a long-term partnership with Castore last year, the tennis star said“Castore is a young, exciting brand that offers something different, with products that are really well cut and designed. For me, it was a natural progression from previous kit partners. They’re the best I have tried and trained in.”
Growth
As Castore has continued to see growth, they began to focus on new markets.
They began targeting securing technical partnerships with team sports such as soccer and cricket. In February 2019 Castore secured $9.74 million of private investment to push the expansion drive.
Tom Beahon said, “Our latest fundraise is a strong endorsement of the businesses performance to date and our strategy of building Castore into a global premium sportswear brand. These funds give us the firepower to expand in a number of exciting areas including partnerships with some of world’s most exciting professional teams.
“Castore creates products that enhance athlete’s performance and we look forward to more leading athletes benefiting from our truly innovative technologies.”
By December 2019, Castore signed a three-year deal with the West Indies cricket team to become its official kit supplier. Furthermore, they are set to launch a collaboration with McLaren Automotive later this year.
All set to drive annual revenue to $48 million in 2020.
The brand has also been helped due to its online sales strategy. Therefore, the coronavirus does not look to have a large effect on the companies 2020 revenue goals.
“We generate 85% of our total revenue through digital platforms so we haven't been hit anywhere near as badly as the vast majority of brands,” said Tom Beahon.
“Whilst we've been in lockdown, people's one opportunity to train a day is probably the highlight of many people's day so our website is going great guns. I do think this will be a long-term change in people's behaviors that will become ever more focussed on their health and fitness, which for a brand in the sportswear space should hopefully provide a positive tailwind going forward.
“Our business, in a slightly strange way, has prospered off the back of this.”
Rangers
Castore's growth would gain a massive shot in the arm when it signed its first deal to enter the soccer market, with 54-time Scottish champions Rangers.
“We made the decision about 12 months ago now to enter the football market,” says Tom Beahon, describing the significance of the partnership in relation to Castore’s ambitions.
“We are a very ambitious brand, we wanted our first partner in football to be a club that matched those ambitions, a real statement of intent in that sense. Rangers is one of the very small number of genuinely global football clubs. Castore has global ambitions so that was a really nice fit.
“For Castore, we are a challenger brand, our brand ethos is ‘better never stops’. Rangers have had some very well documented challenges of their own in recent history, so to partner with a club that has been through all of that, they are an embodiment of the better never stops mindset.”
Castore has highlighted that the deal with teams such as Rangers is not just a case of creating simple brand recognition through traditional activations. It plans to change the current technical partner relationships by offering teams a more tailored approach. With the hope that this delivers better value for clubs and supporters.
“Outside of the top clubs, big brands just don't treat those [teams] anywhere near as well. They don't get bespoke kits designed for them, they don't get relationship managers allocated to that partnership to support the club on a day to day business, they don't help them with marketing or brand elevation or content creation. All of those things are really important over a period of time to help elevate the club's own brand and expand it internationally.”
Castore's vision is to offer the clubs who do collaborate with them a unique service that the current heavyweight sportswear brands don't offer. This would mean that Castore would become the first sportswear brand that would offer each club partner their own premium designs, filling a huge gap in the market.
“We all know that Nike, Adidas, Puma have huge global brand awareness. They're some of the most successful brands in any sector, anywhere in the world. But, to our minds, when we started Castore, they all had become very similar in terms of the products being created, so they will all use very similar fabrics that are sourced in the Far East.
“Off the shelf, there's not a lot of innovation that goes into those products. Adidas put their logo on it and call it Climacool, Nike will put a swoosh on it and call it Dri-Fit. But, in essence, it's almost exactly the same fabric. And then they all manufacture in almost exactly the same factories," explained Tom Beahon.
Rangers fans showed their support for Castore's efforts, as they flocked to the brand's website the day the home kit was announced. Within 24-hours Castore announced that their first run of stock had run out.
“Our job as a new kit partner was always to tap into that positivity and passion and get these people excited.
“That’s very much what we’ve tried to do, we wanted to link to the history to the club as well as highlight a new era with Castore and a very exciting season ahead.
“A couple of the design features have been picked up by the fans like the wave pattern on the front that was to represent the blue sea of Ibrox.
“That’s not something done previously on Rangers jerseys, but we wanted to link to the fantastic heritage of this football club.
“Based on the very early sales figures I saw, it looks like we’ll sell out within 24 hours, the initial 50,000 units.
Starting with a club such as Rangers can only be beneficial for Castore. Rangers fans are based in every corner of the world, opening up new markets to the fledgling brand.
“But since we announced it, the growth has accelerated. It’s always hard to directly attribute growth to specific drivers but the partnership undoubtedly has played a big role in that.
“It’s definitely true to say Castore has been affected, already, in a very positive way from this partnership.
“The Rangers fan base are very keen to support and purchase anything that’s associated with their club and the most interesting thing to see is the truly global nature of the fan base.
“Australia, Canada, North America. For those guys to now be aware of Castore is fantastic.”
If Castore continues on this level they have the potential to help Rangers engage more fans.
“Back in the 1990s, Rangers were selling more kits than Manchester United. That’s the level. It’s a big challenge but the fan base is global and what the club is doing on the pitch is trending in the right direction.
“We are going to work harder than any brand has since the 1990s to get them back to the top level.
“We’ve got no desire to partner with mediocre brands or work our way up by starting with tier-two teams. We only want to partner with the best.
Castore has already announced that they will be growing their soccer portfolio, adding a club from the Premier League, Serie A and one from Portugal's Primeira Liga.
Competition
Castore hopes to represent the sports market in its move away from fast fashion. As customers grow they hope that Castore will be their choice when they want to move on from cheap athletic clothing to quality fitness products.
“Consumers will be ever more focussed on the quality of what they buy and they'll rather invest in a smaller number of higher quality products versus a higher volume of lower quality products, which they change and throw away on a regular basis,” Tom Beahon believes.
By focusing on the niche corner of premium athletic clothing hopefully will distinguish Castore from their much larger competitors.
It is likely that the brand will evolve and revise its product pricing structure to allow for a slightly more “accessible” price point, though this may lose the brand some of its desirability factor. However, this could help the business further compete within the space.
It will be interesting to see how far Castore’s current offering can stretch in its bid to break into soccer’s upper echelons, not to mention its sustainability. The sports apparel industry is littered with failed startups who eventually ran out of capital, which could be exacerbated by the impending recession brought on by coronavirus.
However, building strong relationships with international brands such as Rangers is certainly going to help Castore in their pursuit of challenging the market heavyweights.