Yoga Goes From Spiritual Quest to Clothing Trend

NEW YORK (TheStreet) -- Over the last few years, yoga pants have made their way from the ashram to the forefront of everyday fashion and everyday life. For investors, it's a tough call on whether or not the style is just a trend or something greater and investible. Wall Street has fallen victim to such trends in the past, and the strength of the concept is debatable. Based on online search indications, I predict strong sales and demand for yoga clothing companies this holiday season.

Lululemon Athletica (LULU) was among the first on the scene for both investors and consumers. The company leads the yoga apparel market. A number of competitors, including Nike  (NKE), Under Armour (UA) and Gap's (GPS)Athleta, have moved in to compete for market share. The Street has debated the severity of this competition for years; it seems that at this point, every brand is winning.

I'm always looking for unique and underused tools to determine company and brand strength. Over the last couple of months I've started using Google (GOOG) Search Interest as a barometer for brand strength, and have found some success personally. The numbers on the graph reflect how many searches have been done for a particular term, relative to the total number of searches done on Google over time.

Below let us take a look at the relative search interest on Google for the keywords "yoga pants" over time.

The above chart was created using the Google Trends tool. Since 2011, the relative search interest for yoga pants skyrocketed. Since then, interest for the product continued on a steady path upward. A score of 100 represents the highest recorded level of interest for the keywords. Since pulling back earlier this year, interest for yoga pants surged again to highs. In November, a score of 85 was registered. Google expects a reading of 90 in December.

Retailers have definitely been taking advantage. Lululemon recently reported year over year 20% quarterly revenue growth, helped by a 5% increase in comparable sales in the third quarter. The company, which retails the majority of its pants for $95 a pop, has been able to sustain its lofty 53% margins despite increasing competition. (Despite its sales success, Lululemon missed its earnings target and has taken a one-week 15.8% haircut in share price.)

Let us now take a look at the relative interest for the keyword "Lululemon" on Google Trends.

Above we see a fairly similar picture to the first. In December, Google is predicting all-time high levels of relative interest for the company.

Some of that may be negative attention. In a November Bloomberg News interview, the (now-ex) CEO Chip Wilson responded to claims that new batches of yoga pants were poor quality or overly sheer by claiming that "frankly, some women's bodies just don't actually work for" the Lululemon pants. Wilson may have put his foot firmly in his mouth -- and lost his job over it -- but his company has grown quite a bit. It seems Lululemon has been able to hold onto and grow its customer base in the face of rising competition and bad press. Despite PR blunders, it looks like demand for the company's products will be at highs this holiday season.

Lastly, I want to take a look at the relative search interest for Athleta, an increasingly tough competitor for Lululemon: chartaletha

As with the other two charts we've seen, relative search interest for Athleta sits at an expected all-time high in December. In 2008, Gap bought Athleta for $150 million, and since then the parent company has actively expanded and integrated its brand. In the most recent third quarter conference call, management seemed exceptionally positive when discussing Athleta's future. Year to date, shares of Gap have done especially well, with returns of 23%.

It is impossible to tell if yoga pants are a fad or something more. All-time high relative search interest throughout the industry would lead us to believe many consumers are getting a pair for Christmas this year.

When the fourth quarter comes around, I will be looking for strength within the yoga pants market segment.

You can recreate this charts, or create your own using the Google Trends tool.

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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