Gap is betting its turnaround on $100 workout pants for men

Courtesy of Gap

Hill City launches in mid-October.

• Gap is launching a new men's athletic wear brand called Hill City, which has an average price point of $80.
• The company is doubling down on athletic wear to boost sales as it continues to be a bright spot in the apparel industry.
• Lululemon is also focusing on men's clothing.

Gap is doubling down on athleisure to boost sales.

On Thursday, the retail giant announced the launch of Hill City, its new men's clothing brand that will be sold online and at its Athleta stores starting in mid-October.

The new collection features a mix of athletic and casual wear, such as shorts, hoodies, and light jackets, which have an average price point of $80. Running pants cost between $98 and $128. f

Athletic wear continues to be a bright spot in the apparel industry. In 2017, US activewear sales totaled $48 billion and accounted for 22% of total apparel sales, according to The NPD Group.

Gap's athletics brand, Athleta, has become one of the most successful areas of its business. In its most recent earnings results, management said that the 2% same-store sales growth at Gap Inc. was largely driven by the success of its Old Navy brand and Athleta. Teri List-Stoll, EVP and CFO of Gap Inc., described these stores as "engines of growth."

Gap is clearly looking at how it can optimize Athleta's growth, and menswear seems like a logical place to start given that the store is currently only targeted toward female shoppers.

"Active is a key growth area for Gap Inc. and Hill City is our response to consistent feedback from customers looking for a premium men's product that combines highly technical fabrications, performance, and style," Gap Inc. CEO Art Peck said in a statement to the press on Thursday.

Adding menswear also allows Gap to better compete with other industry players who are also focusing on this customer.

Lululemon, one of Athleta's key competitors whose bread and butter has long been women's yoga pants and workout clothing, is well into its strategy to grow menswear into a $1 billion business by 2020. In Lululemon's quarterly earnings call in May, COO Stuart Haselden said that 30% of the new customers added in the first quarter were men.

Haselden said that they were reeling these customers in with casual wear, specifically, the men's office travel commute line. The ABC (anti-ball-crushing) pant is one of its most popular items in this category, and it's paving the way. These $128 stretchy pants are Lululemon's version of comfortable jeans.

"The ABC pant in men's is probably one of the best. It's clear that our guests have an appetite for this," Haselden said.

He added: "We're being pulled into these categories versus pushing our way into them, if you will."