UAE Retail Investors Set Sights On Sportswear Brands, Predicting Shares Rise With Global Sports Season
Sporting events are taking the limelight this summer, and UAE retail investors are making strategic moves. According to a survey by eToro, over 57% are currently invested in discretionary consumer goods, with 59% showing interest for this summer.
The ICC Men's T20 World Cup is just one of the major events expected to drive sportswear brand shares up. From June to August during the bustling summers of 2016 and 2021, top 10 sportswear companies saw their values rise by 11-12%, outshining major stock market indices.
Highlighting the nation's growing sports scene, Dubai's Nike Well Festival and the upcoming Games of the Future 2025 are drawing attention. Regional events like UFC Fight Night, NBA Abu Dhabi Games 2024, and UFC 308 also add to this momentum.
Despite recent underperformance, sportswear brands could see a turnaround. They have returned 18% to shareholders over the last five years, lagging behind the S&P 500's 88%. This year's sportswear basket is down 8%, while the S&P 500 rose by 10% and the FTSE 100 by 7%.
Individual brand performances have varied greatly. Adidas dropped 11% in five years, but Under Armour plummeted by 70%. On the other hand, Lululemon rose by 85%, and Asics soared a whopping 620%.
eToro Analyst Sam North stated, "In the next few months, the world's biggest sportswear brands will gain maximum exposure with billions of TV viewers tuning in to watch the Euros, the Olympics, and other blockbuster sporting events. The hope is that the significant investment in sponsorship can boost sales and share prices, as sport fans, inspired by what they've seen, go out and buy new trainers, shirts, and sports equipment."
He added, "Any boost inspired by the Olympics and Euros will be warmly received, given the fairly stagnant performance these firms have seen over the last five years. After enjoying a pandemic boom with extra consumer cash and fewer spending options, several of the biggest sports names have been suffering a post-pandemic hangover, with cost-of-living constraints also playing a part."
North noted structural signs that these brands could rally. "Inflation continues to ease, giving consumers more spending power, while the stocks are trading at a near-bottom range of a 24x P/E valuation ratio, making them effectively cheap."
He further commented on the standout performers, "It's also important to recognize just how brilliantly some companies in our basket have been doing, with golf conglomerate Acushnet and Japan's Asics rewarding shareholders with triple-digit returns."
Here's a comparison of performance data from May 2024:
| 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% |
Brand performance data from May 2024:
| 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) | 2% | 43% | 22% | 169% |
| Amer Sports* | n/a | n/a | n/a | n/a |
*Amer Sports IPO on February 1st, 2024
In conclusion, the upcoming sports season offers a golden chance for sportswear brands to rebound. Investors will be keenly watching if this year's events can replicate the 11-12% gains seen in past busy summers.
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