All eyes on sportswear brands in the coming weeks. The summer of the Olympics (and not only) begins, which have always been an exceptional springboard for sportswear brands, even on the stock market. In fact, in the Olympic summers of 2016 and 2021, the stocks of these companies (eToro survey) increased by 12%, outperforming the main stock market indices.
It's a summer full of sporting events. European Championships, America's Cup, Wimbledon and above all the Paris Olympics and Paralympics. A unique opportunity for visibility for a sector that will exceed 500 billion dollars in global turnover in the next five years. Everyone agrees: sporting events (the Olympics first and foremost) are not an immediate commercial driver. But the visibility outside the norm gives a boost to sales in the medium-long term and is also played out on the financial markets.
And so sportswear brands, including big ones, are confident that the sports summer can boost the performance of their stocks on the stock market. The sector, in fact, does not shine on the markets. Among the big names, only Adidas and Asics have recorded a significant positive return since the beginning of the year: 24% for the former and 99% for the latter. Adidas closed 2023 with sales that stood at 21.4 billion euros, down 5%, the first nine months of Nike's fiscal year (ended in February) recorded a timid +1% in revenues ( 35 billion euros), while Pumait reached +1.6% to 8.6 billion euros. Insignificant percentages compared to sector growth estimates. And on the financial markets the sector can certainly do better.
In fact, the stocks of the sportswear brand have returned 18% to shareholders in the last 5 years (eToro analysis) and the performance of ten of the major sportswear brands in the world has improved (+11/12%) in the Olympic summers of 2016 and 2021. An attractive and desirable increase, therefore, for the brands involved who have had to settle for that +18% over the last five years, compared to the 91% generated by the S&P 500 in the same period. Plus 2024 is underperforming, down 8% compared to gains of 10% for the S&P 500 and 7% for the FTSE 100.
In the last five years, the value of Adidas has fallen by 11% and Under Armour, the Baltimore-based brand, has fallen by more than 70% in the same period. “The next few months represent a crucial time for these brands, but there are encouraging structural signs. Inflation continues to decline, giving consumers more spending power, while stocks are trading at a very low 24x price-to-earnings range, making them actually cheap,” comments Sam North, analyst at eToro.
Then there are brands that go against the trend and that with the Olympic push are playing for a further comeback on the markets. Lulelemon has almost doubled its share price (85%) in five years, the Japanese Asics has recorded a surge of as much as 620% and the multinational golf company Acushnet of 169%.
And there are the “minor” brands that will use the Olympics to expand. An example is Hoka from the US group Deckers Outdoor Corporation. A “small” one given the 4 billion dollars in turnover (Nike is close to 39 billion dollars), but with a successful performance on Wall Street. The stock went from $160 in 2019 to $1090 this year. Also competing is On, a multinational of Swiss origin, with a turnover of 1.8 billion euros which has grown by over 48% on the stock market in the last year.
For all brands, therefore, the Olympic trampoline is unmissable. The preparations already demonstrate this. Nike announced, without giving figures, that it plans to spend more on these Olympics than in the past. This is certainly no coincidence!
