After rising by 22.7 percent in 2015, the stock market capitalization of public companies in the sporting goods sector declined by 0.5 percent on a currency-neutral basis in 2016, dragged down by double-digit declines for major players like Nike, VF Corp. and Under Armour. Nike alone represented nearly 25 percent of the industry's total stock market capitalization of $341.8 billion.
The sector's relatively lackluster development is based on SGI's annual study of the performance of each public company in the sector between the beginning and the end of the year. The increases and decreases are calculated in their local currencies and weighted by market capitalization on a fully diluted basis. The data, which are reported on page 3 of this issue, are converted to U.S. dollars at the average exchange rate for the year for ranking purposes.
In contrast with previous years, sporting goods industry stocks performed less well overall than the general stock market. The S&P 500 rose by 9.5 percent for the year and the Global Dow was up by 11.3 percent. In Europe, the FTSE 100 gained 17.0 percent, the DAX went up by 12.4 percent and the French CAC 40 by 8.0 percent. In Asia, the Hang Seng rose by 4.5 percent and the Nikkei by 0.4 percent.
As usual, we have included Luxottica in the chart because it is the parent company of Oakley. If we take it out, the industry's stock market capitalization rises by 1.0 percent to $316.0 billion. If we also eliminate Nike, which has enjoyed premium treatment by analysts, it goes up by 9.9 percent to $231 billion.
The most obvious explanation for the underperformance of the sector is the bankruptcy last year of The Sports Authority, Sport Chalet and other major sports retailers in the U.S., which led the U.S.-based sports companies on our chart to suffer a combined 9.6 percent decline. Their major rival in the U.S. market, Dick's Sporting Goods, benefited from the situation, gaining 47.8 percentage points.
Partly offsetting the 23.6 percent drop at Nike, Adidas recovered strongly from its low 2015 valuation with an increase of 68.4 percent last year. It helped European stocks to record a currency-neutral increase of 25.7 percent. Asian sporting goods stocks went down by 2.2 percent, largely in line with the general local stock market.
Along with Adidas, other athletic footwear stocks like Anta, Yue Yuen, Puma and Wolverine Worldwide recorded nice increases on the stock exchange. Offsetting the significant declines at Nike and Skechers, a former star in the market, they helped the footwear category to inch up by 1.3 percent for the year. Apparel stocks recorded an overall decline of 14.7 percent, reflecting the lower performance of this product category, with rises at Columbia Sportswear and Moncler insufficient to offset the reduced valuation of VF, Under Armour, Hanesbrands and Gildan Activewear. Sharp declines at Fitbit and GoPro, which were partly offset by an increase at Garmin, caused the equipment sector to reduce its stock market valuation by 4.3 percent.
Overall, the 18 public retail stocks on our charts gained 17.4 percent, driven by increases at Lululemon, Dick's and JD Sports Fashion. While JD increased its value by 52.9 percent, its main rival, Sports Direct International, fell by 54.1 percent.
