Respect your universe: Cult following for group aiming to be the next major sportswear label

To describe stock in the premium apparel group Respect Your Universe (OTC:RYUN) as hot would be something of an understatement.

In just three months it has soared more than 800 percent on little or no tangible news flow, and it has garnered a large, though still rather quizzical following on the internet.

A measure of RYU’s popularity was provided by an over‐subscribed fund‐raise last month.

It came to the market looking for US$2.5 million, and walked away with US$3.3 million as it attempted to satisfy demand for the shares. And if all the warrants are exercised it will receive more than US$9.7 million.

So what is all the fuss about? Well, this is not just a run-of‐the‐mill fledgling sportswear business. It is an international brand building exercise with mixed martial arts at its core.

And for such a small organisation RYU has managed to attract some big hitters. It has drafted in senior figures from Nike, Adidas and Motorola and the two former executives of Lululemon Athletica, the yoga brand that is now a worldwide phenomenon. 

The idea was the brainchild of a core group led by Kristian Andresen, now RYU director and chairman, who, while working in Las Vegas, a Mecca for mixed martial arts, suddenly realised the sport’s potential.

While the fans were catered for, albeit poorly, there was very little high quality high performance clothing for the fighters themselves.

The team imagined doing for MMA what Nike has achieved in basketball using Michael Jordon as its main marketing weapon. 

Indeed they had seen first‐hand the power of the Nike machine as they had been drawn to Vegas initially to work on stills and videos for Jordon’s website. 

Ryu’s founders believed they had stumbled upon an amazing opportunity to fill a void in the MMA apparel landscape.

“Fighter’s apparel was limited, and we had our heads the Jordan Brand and the business model,” Andresen says.

“We thought why don’t we transplant that model into mixed martial arts? 

“We know that Nike won’t do it because they don’t understand the space and the growth potential like we do.  We want to do what Nike did for basketball, but for mixed martial arts."

The company was founded in December 2008, and its initials will have a great deal of resonance with those familiar with the martial arts.

RYU as a word is pronounced ‘roo’ and means “school of thought” or “style”. And it is a perfect, thoughtful antithesis to the prevailing MMA skulls and flames apparel offerings on the market currently.

In the US, mixed martial arts is a huge crowd puller, as it is in Brazil, where it is the number one sporting attraction, and it also has a major following in Asia.

Here in the UK it is gaining traction in the gyms and on sports channels such as Sky and ESPN where it is slowly edging out boxing in the viewer stakes.

So the popularity of the UFC, Strike Force and Ultimate Fighter should not be under‐estimated. 

Neither should its commercial potential as it has a ready‐made market of 18 million potential wearers of the apparel, RYU chief executive Christopher Martens reveals.

“This used to be back‐street sport,” he says. “But it (mixed martial arts) has done everything right to get into the mainstream. There is yet to be a death in the ring – unlike boxing – and they really are stealing a march on boxing.

“We’ve spoken to the people involved (in the sport) and there is real appetite for what we are doing. 

“We wanted to create a clean image and clothing that was technically up to the task so Fighters wanted to wear it because there is an advantage to wearing it.”

But the opportunity is far greater than a line of clothing limited to just one particular sport. 

The functional, high‐performance clothes designed for these ultra‐fit athletes are expected to be adopted as gym staples before eventually becoming a more mainstream premium sports brand. 

If this happens then the potential addressable market is a massive US$20 billion a year, Martens says.

“We won’t be exclusive to mixed martial arts but that will be our energy point,” he adds.

“Once we achieve success here we will be able to sell it into other sports and then capture a larger slice of the (sportswear) market.” 

The full RYU technical line goes on sale in Spring 2012, and Martens is predicting a great response in the market place.

The RYU CEO references Lululemon Athletica several times during our conversation, and it is clear he would like to emulate the success of the Vancouver‐based brand.  

Marrying his passion for yoga and sportswear, the company’s founder Dennis ‘Chip’ Wilson created from scratch in1998 a company that now turns over around US$450 million a year and is valued at US$7.7 billion. 

Hoping to recreate that magic at RYU are Erick Siffert and Cindy Lecomte, who were respectively director of product operations and strategic merchandise manager for Lululemon before making the switch. 

Siffert, who also worked for Nike, is the RYU’s chief operating officer, while Lecomte is director of brand merchandising. 

And it doesn’t stop there. This board oozes quality and experience in the spheres of sportswear and brand management.

President John Wood is also a manager for the Armani Group, while Kevin Hyland, the head of sales, comes from Adidas. CEO Martens comes to RYU from Nike ACG and Nike Beijing Olympic positions and CFO Stephen Eklund served as CFO of Nike Golf, one of many top Nike positions he has held. 

“Ultimately it is the consumer’s response (to the RYU brand) that will call the shots, but I think we have assembled a very strong team giving us a great chance of success,” Martens concludes.