The stock market valuation of the sporting goods sector fell by 8.3 percent on average between June 30 and Sept. 30 of this year, after rising by 10.9 percent during the first quarter and by 25.6 percent during the second quarter. In contrast with previous quarters, the sector performed less well than the general economy, judging from the fact that the Dow 30 index dropped by just 1.9 percent and the Financial Times’ FTSE was up by 0.9 percent.
The industry’s strong reliance on China for sourcing purposes and as a market is probably the main reason for the new dynamics. Interestingly, while Standard & Poor’s 500 index shot up by 109.3 percent during the period, leading some economists to fear the advent of a stock exchange bubble, the Chinese Hang Seng fell by 14.7 percent, reflecting the recent slowdown in China’s economic growth due to sporadic coronavirus outbreaks, power shortages and real estate problems.
As we warned a few days ago, economists have also expressed fears of a slowdown in the recovery of the eurozone due to the persistent Delta variant of Covid-19, rising inflation, and supply chain and logistics problems. As our industry is facing many of these issues more than others, investors have evidently preferred to steer away from many segments of the sporting goods market. A similar evolution has been observed in the general fashion market, with even the stocks of big e-tailers such as Asos and Zalando approaching their 52-week lows lately, as Textilwirtschaft has remarked.
The three international industry majors – Nike, Adidas and Puma – saw their share price shaved by 6.0 percent, 13.1 percent and 3.5 percent, respectively, during the third quarter of 2021. All of them had warned investors about mounting supply chain problems while releasing their latest results and their outlook for the balance of their financial year.
Some Chinese companies such as Anta Sports Products, China Dongxiang or Xtep International were the biggest losers, in line with the evolution of the Hang Seng. That goes also for a major Chinese sporting goods retailer, Topsports, which lost 30.0 percent of its value in three months, as well as for Fila Holdings. Li Ning outperformed.
The virus affected Yue Yuen in two ways. In addition to being one of the biggest sporting goods retailers in China through its Pou Sheng subsidiary, the world’s largest manufacturer of sports shoes suffered from the Covid-related shutdown of some of its factories, particularly those that it operates in Vietnam.
On the other hand, the biggest U.S. sporting goods retailer, Dick’s Sporting Goods, saw its share price increase by 19.6 percent, benefiting from an expansive U.S. economy. The two U.K.-based sports retail majors, JD Sports Fashion and Frasers Group, parent of Sports Direct, enjoyed gains of 14.0 percent and 13.4 percent, respectively, probably for different reasons. However, the stock market quotation of XXL declined by 9.7 percent. Foot Locker fell by 25.9 percent, in spite of better-than-expected second-quarter results and a stable outlook predicted by the two major rating agencies, due perhaps to its softening growth.
