Can the Olympics rescue sportswear giants? Leading brands struggle despite blockbuster summer

• Basket of sportswear stocks including Nike, Adidas and Puma returned – 6% over five years
• However, in previous busy summers of sport, their value jumped by as much as 12%
• Whilst some top brands have struggled, others have seen phenomenal growth, from Asics to golf group Acushnet

As the Olympics gets underway later this week, analysis from trading and investing platform eToro shows that the usual ‘summer bounce’ for sportswear giants is failing to materialise as their struggles continue.

Summers featuring the Olympic Games and major football tournaments have historically boosted sportswear brands. To illustrate the effect, eToro created a market capitalisation-weighted basket of 10 of the world’s biggest brands and found that in the comparably busy summers of 2016 and 2021 –- when the Olympic Games, European Championships and Copa America tournaments also took place –-  the value of these firms rose between 11-12% from June to August, significantly outperforming major stock market indices.

This year, however, their share prices have sunk 13% since the beginning of June, capping a period of woeful underperformance versus the wider market. Over five years, sportswear brands have collectively lost 6% in value while the S&P 500 has delivered an 89% return.

Commenting on the findings, eToro Analyst Sam North said: “This summer, the world’s biggest sportswear brands have been gaining maximum exposure with billions of TV viewers tuning in to watch the Euros and other blockbuster sporting events. The hope for these firms is that the sizeable 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. However, this effect hasn’t played out . 

“An Olympics boost would be warmly received given the stagnant performance of many of these brands in recent years. After benefitting from the pandemic boom when 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 basket of stocks may have collectively performed poorly in recent years, returns across this group of companies have varied, with major disparities between the winners and losers.

German heavyweight Adidas has seen its value drop 18% in the last five years, though this pales in comparison with Baltimore-based Under Armour, which has lost 27% of its value over the same period. A boost would be particularly welcome for Nike –- whose share price has dropped 33% so far this year –- after the company stated it would spend more on marketing around this Olympics than ever before.

However, brands at the luxury and specialist end of the market have fared much better, with athleisure brand Lululemon enjoying healthy share price gains (51%) over five years, while Japanese running shoe specialist Asics has soared 806%.

Sam North continues: “Whilst the Olympics is a big opportunity 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 look relatively 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.” 

**Data from July 2024. Past performance is not an indication of future results.

* Amer Sports IPO on February 1st, 2024
**Data from July 2024. Past performance is not an indication of future results.

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 July 2024.