2XU sportswear brand’s co-founder has a yarn about yarn
2XU's Aidan Clarke is bent on taking the niche line of compression clothing to the broader market
Not since surf labels Billabong and Ripcurl has an Australian company made the kind of global waves high-performance sports brand 2XU is creating.
Pronounced “two times you”, a reflection of the company’s competitive philosophy of self-improvement, it was founded in 2004 by three athletes – Aidan Clarke, Jamie Hunt, and Clyde Davenport.
The trio jumped at the chance to fill the high-performance sportswear niche, and 2XU has since become a favourite among the sporting elite for its unique compression-wear clothes.
Last year, LVMH-backed L Capital took notice. Davenport sold his 40 per cent stake to the group in December.
The brand is now in 58 countries and celebrating its fifth anniversary in Hong Kong.
Clarke talks to the South China Morning Post about his audacious plan to make 2XU a billion-dollar business within a decade, the future of high-performance sports fabrics and why he likens running this fast-growing brand to being in a “constant state of paranoia”.
How did this brand come about?
When [the founders] met in 2004, we realised nobody was focusing on performance any more. We found that the big brands – the Pumas, Nikes, Adidas – were vacating the space of high performance. They were focusing on stories about DJs and fashion and cool.
We thought the world didn’t need another sports brand unless it could be very performance-focused and bring benefits others couldn’t.
We got a lot of good traction early and we made great compression products and all of a sudden they were on these world champions. Now we find Nike and Adidas are responding and trying to tell a technical story again. But we’re a little problem for them, and a growing problem.
Your signature product is compression technology. How does that work?
It’s half our business. In terms of physiology, it’s not new. The medical industry has been using it for hundreds of years.
You could be shot in the foot in a war and they would give you compression bandaging, which is tighter at the bottom and looser at the top, creating blood flow. The reason they had it was so you didn’t get infections. You didn’t get gangrene.
Often, when ladies had a caesarean, they would put on stockings to recover faster.
What is new is using compression technology in sports. To do that properly, you need to make a very powerful but lightweight fabric, and we’re experts in that. We’ve created a circular knit. It has the best power and the lightest weight.
2XU has pretty much perfected that to help you warm up faster. It helps your performance during exercise, and we have studies that show this. More importantly, it helps you recover faster.
How much do you put into research and development?
It’s disproportionate. For most people, R&D means making the product and seeing if it works. We start with the fabric. We work with the Royal Melbourne Institute of Technology.
We understand the power performance of yarns and test them in a scientific environment. We’re very obsessive about ingredients.
Then we go off to the Australian Institute of Sport and all these world champions and say “give us your feedback, tell us what works and doesn’t work”. It’s almost like a constant state of paranoia, and this is how we constantly evolve.
It makes it really hard for other people to copy us and for the big guys to compete with us, because we’re so dynamic and constantly changing.
We started here five years ago with the triathlon community, then a very keen endurance expat community. It was very small and niche.
Then we had more locals starting to wear it, and then you got a momentum with things such as trail running.
Now it’s not just endurance and run, but gym, fitness and yoga, too. People are wearing it because it looks good.
We’re a focused performance brand, but I think we’re starting to get a bit of the fashion market, too, because it’s powerful fabric and it’s flattering and the designs are unique.
We’ve grown very quickly in Hong Kong and also in Singapore. Those are probably the two success stories with Asian cities, but we have a massive opportunity, and this is where LVMH could spot the opportunity – with Asian tigers Korea, Japan, Taiwan and of course [mainland] China.
We don’t have distribution [on the mainland] yet. We have partial distribution with Esquire Group with some of the department stores.
At the time of the announcement, it was said that the LVMH-backed funding would be used to drive further Asian expansion. What strides has the group helped you make?
They’re very aggressive in the region with their LVMH brands, have great relationships with distributors and large retail malls. Some of the team that are based in Singapore also come from sports apparel backgrounds, so they have a real passion for what we’re doing, and they have a lot of introductions. We’re getting a lot of expertise from LVMH.
The mainland sportswear market has had a very rough ride the past few years and is still not seeing much sign of recovery. What’s your strategy there, in view of the severe pollution problem that prevents people from doing exercise?
I don’t think I can solve the pollution just yet, but we believe that having a unique and strong performance story is important, because China doesn’t need another cheap sportswear brand.
We believe that by providing great quality and a premium position, it will work. Although we’re not going to sell 2XU to a billion Chinese, there are a lot of people who can afford Western luxury brands that LVMH are doing very well with.
What are your short to mid-term goals?
We have a very audacious plan to become a billion-dollar business, probably eight to 10 years away. However, we are rapidly moving through our goals – we need to get there.
The first goal we articulated internally was “let’s get to US$150 million”, and that would probably take about three to four years. I’m pleased to say we are about a year ahead of that time frame. I think we’ll go well through US$100 million next year and US$150 million-plus a year or two early.
We have to really consolidate our North American business, build our European business, take on Asian markets, which are a massive opportunity. One thing that LVMH saw is our lack of sales in what is their strongest region.
Also transcending from an elite brand – you might know us if you’re a world-champion runner – to the general exercise person. That opportunity gets us into the public consciousness and become a household brand.
In the next couple of years, we’ll probably be doing shoes and focused accessories, things that enhance your workout, like smart fabrics. We’re working with some very clever people on what we can build into your garments that can tell you about your oxygen saturation levels, dehydration levels – or heartbeat, which can already be done.
There are some really great options down the pipeline. I think you’ll really see the space of performance apparel leap forward in the next few years, it’s quite exciting.
Fellow Australian sports brand Billabong once dominated the market but lost its brand value after expanding into too many categories. How do you plan on avoiding the pitfalls that brought that business down?
They lost their authenticity. I’m very familiar with that story. Probably what inspired us in the early days were the great Australian surf brands on the world stage. Some of them not so much any more, but we wanted to be Australia’s first global sportswear company.
Nobody had ever taken on general sports. You gotta stay focused on why you exist, and for us that’s because every product has to be the very best.
If we ever do a shoe, it can’t be a “me too” product. It can’t be an equivalent to a Nike or Adidas shoe. It has to have something unique to it.
Also we have to be very conscious of being profitable as you expand. Billabong’s cost overhead was very large. Sales started to drift down, and then you’re in the horrible place where you got all these retail leases and sales aren’t what they used to be.
We are aggressive but intelligent, so I think we’ll be able to avoid those pitfalls.