The average share price of the sporting goods sector grew by 26.65 percent between March 31 and June 30, accelerating from the 10.9 percent growth recorded in the first three months of this year. As usual, the public companies in this sector scored much better than all the major stock exchange indexes, as shown in the accompanying chart.
The reopening of sporting goods stores, gyms and stadia after the lockdowns triggered by the latest wave of Covid infections certainly contributed to boost the market capitalization of these companies. The prospect of public exposure at this summer’s mega sports events has also been a factor. The surprisingly good performance of Nike in the fourth quarter ended May 31 confirmed the trend, reversing the 6.1 percent drop that its stock had suffered during the first three months of this year.
Nike’s appreciation of 16.25 percent in the three months ended June 30 was a direct result of the very positive quarterly statement that the industry leader released on June 24. It also affected the stock market performance of Adidas and Puma, whose share price rose by 17.86 and 20.36 percent in the latest quarter, respectively, ahead of the release of their own income statements for the period.
However, the biggest quarterly gains were booked by Chinese companies such as 361 Degrees, Li Ning and Xtep International. A year ago they were deeply in the throes of the Covid pandemic in China. Furthermore, they are believed to have won new customers since April from a boycott of Western brands such as Nike, Adidas and Puma over the issue of human rights violations in Xinjiang. The biggest Chinese player, Anta Sports Products, trailed behind them, probably because of its controlling stake in Amer Sports.
We were surprised by the sequential decreases in the share price of Columbia Sportswear, Giant Manufacturing, Hansbrands, VF Corp. and Wolverine Worldwide during the latest quarter. All these companies had recorded increases in market capitalization during the first quarter, but evidently, investors were dissatisfied with their subsequent financial releases.
We were also relatively surprised by the 30 percent increase in the quarterly share price of Frasers Group, the parent of Sports Direct, which may perhaps be related to its “elevation strategy.” Its arch-rival, JD Sports Fashion, booked an increase of only 11 percent, due perhaps to some criticism of its aggressive investment policy.
|Industry Share Prices|
|Company||Exchange||Currency||June 30, 2021||March 31, 2021||Change Q2||Change Q1|
|JD Sports Fashion||London||GBP||919.00||824.60||11.45%||-3.7%|
Photo: Omid Armin, Unsplash