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- Over the past year, Nike, Adidas and Puma have faced growth challenges while Asics, and Acushnet have shown strong performances
Dubai - As audiences across the world gear up for a summer packed with sporting events, UAE retail investors are making strategic moves in their investment portfolios. Over 57% of UAE retail investors are currently invested in discretionary consumer goods and an additional 59% expressed interest in the segment in the summer, found a recent survey(1) conducted by trading and investing platform eToro.
With the recent kick off of the summer-long sports bonanza marked by the ICC Men's T20 World Cup, analysis from eToro suggests that the world’s biggest sportswear brands could be in for a much-needed share price boost. eToro created a market capitalisation-weighted basket of 10 of the biggest sportswear brands in the world and found that in the comparably busy summers of 2016 and 2021, the value of these firms rose between 11-12% from June to August, significantly outperforming major stock market indices.
These sporty summer seasons saw a glut of major global events where the world’s biggest sports brands gained huge exposure, from the European Championships and Copa America football tournaments, to the Olympics, Tour de France, golf majors and Wimbledon Championships.
In the UAE, the recent debut of the Nike Well Festival in Dubai, coupled with the announcement that the country won the bid to host the Games of the Future 2025, suggests that the national sports landscape is primed for continued growth. Additionally, a slew of upcoming sporting events in the region including UFC Fight Night, NBA Abu Dhabi Games 2024, and UFC 308 underscore this growth trajectory.
According to eToro’s analysis, any repeat of the share price bounce seen in previous years would be more than welcome for sportswear brands, given they have collectively returned just 18% to shareholders in the last five years – a fifth of the 88% generated by the S&P 500 over the same period. The sportswear basket has performed particularly poorly in recent times, down 8% so far this year versus the S&P 500’s 10% gains and the FTSE 100’s 7% gains.
Whilst the basket of stocks may have collectively performed poorly in recent years, returns across this group of companies have varied, with major winners and losers.
German heavyweight Adidas has seen its value drop 11% in the last five years, though this pales into insignificance compared with US-based Under Armour, which has lost more than 70% of its value over the same period. However at the more luxury and specialist end of the market, brands have fared much better, with athleisure brand Lulelemon enjoying healthy share price gains (85%) over five years, while go-to running brand Asics has soared 620%.
Commenting on the findings, eToro Analyst Sam North said: “In the next few months, the world’s biggest sportswear brands will be gaining maximum exposure with billions of TV viewers tuning in to watch the Euros, the Olympics and other blockbuster sporting events happening across the summer. The hope for these firms is that the sizable fortune they spend on sponsorship can boost sales and share prices, as sport fans, inspired by what they’ve seen on the screens, go out and buy new trainers, shirts and sports equipment.
“Any Olympics and Euros-inspired boost will be warmly received, given the fairly stagnant performance some of these firms have seen over the last five years. After enjoying a pandemic boom as consumers had extra cash in their pockets and fewer things to spend it on, several of the biggest sports names have been suffering a post-pandemic hangover with cost-of-living constraints also playing their part.
“Whilst the next few months are a pivotal moment for these brands, there are also structural signs that they could be well-positioned to rally. Inflation continues to ease, giving consumers more spending power, whilst the stocks are trading at a near-bottom range of 24 x P/E valuation ratio, making them effectively cheap.
“It’s also important to recognise just how brilliantly some of the companies in our basket have been doing with golf conglomerate Acushnet and Japan’s Asics rewarding shareholders with triple-digit returns.”
| Table showing sportswear basket of stocks versus major indices | ||||
| Basket/indices | Returns ytd | Returns 1 year | Returns 3 years | Returns 5 years |
| Sportswear brands | -8% | -5% | 73% | 18% |
| FTSE 100 | 7% | 9% | 12% | 15% |
| S&P 500 | 10% | 24% | 25% | 88% |
| NASDAQ | 11% | 33% | 125% | 113% |
**Data from May 2024. Past performance is not an indication of future results.
| Table showing performance of brands included in global sportswear basket | ||||
| Brand | Returns ytd | Returns 1 year | Returns 3 years | Returns 5 years |
| Nike | -14% | -12% | -32% | 18% |
| Adidas | 24% | 48% | -23% | -11% |
| Puma | -7% | 2% | -50% | -11% |
| Fila | 1% | 5% | -29% | -50% |
| Asics | 99% | 132% | 235% | 620% |
| Lululemon | -41% | -10% | -6% | 85% |
| Under Armour | -21% | -5% | -69% | -70% |
| Anta Sports | 10% | 3% | -47% | 78% |
| Acushnet (Titleist, FootJoy) | 2% | 43% | 22% | 169% |
| Amer Sports* (Wilson, Salomon) | n/a | n/a | n/a | n/a |
* Amer Sports IPO on February 1st, 2024
**Data from May 2024. Past performance is not an indication of future results.
| Performance in past busy sports summers | ||
| June-August 2016 | June - August 2021 | |
| Sportswear basket | 11% | 12% |
| S&P500 | 4% | 8% |
| FTSE100 | 9% | 6% |
| NASDAQ | 5% | 11% |
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About this data
eToro’s sportswear basket is a market-cap weighted 10-stock basket constructed with 10 of the largest global sportswear companies. Data source: Refinitiv. Data from May 2024.
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