By Thomas J. Ryan
The rash of active lifestyle retail bankruptcies in 2016 cast a pall over the industry on Wall Street in 2016, but also clearly helped those left standing in retail. Active lifestyle vendors, on the other hand, had a rougher go of it.
One of the biggest industry retail beneficiaries, Dick’s Sporting Goods (NYSE:DKS), saw its stock jump 51.8 percent for the year to $53.10 at the close of 2016. Dick’s wound up buying Sports Authority, its intellectual property that included information on Sports Authority’s 28.5 million loyalty program members, and the rights to acquire 31 store leases. But the bigger benefit is expected to come from reduced competition in its markets.
Dick’s officials noted more than 200 Sports Authority stores were within 5 miles of Dick’s stores. Within 10 miles of a Dick’s location, that total rises to more than 350 stores, including Sport Chalet, which liquidated earlier last year.
Among other full-line sporting goods chains, Big 5 Sporting Goods (Nasdaq:BGFV), which faced off against Sports Authority in many of its West-Coast markets, surged 73.7 percent in 2016. Hibbett Sports (Nasdaq:HIBB) climbed 23.3 percent.
Lululemon (Nasdaq:LULU), once the Wall Street darling that led the athleisure craze, bounced back in 2016, rising 23.9 percent. Efforts by CEO Laurent Potdevin to improve on its supply chain have bolstered gross margins. Rebounds were also seen by Tilly’s (NYSE:TLYS), vaulting 98.9 percent, and Zumiez (Nasdaq:ZUMZ), jumping 44.5 percent, as both managed to see a sales pickup in a still challenged teen channel.
Cabela’s (NYSE:CAB) rose 25.3 percent in 2016 to $58.55, propped up by Bass Pro’s $4.5 billion offer in October to acquire its largest competitor. The stock continues to trade well below the deal price of $65.50 a share, however, due to some concerns that the merger won’t close as expected in the first half of 2017 as the Federal Trade Commission reviews the deal. Smaller gains were seen in 2016 by Genesco (NYSE:GCO), Foot Locker (NYSE:FL) and Finish Line (Nasdaq:FINL).
The overall gains were supported by broader market gains as investors banked on an improving economy. The Dow Jones Industrial Average rose 13 percent, netting its best performance since 2013. The S&P 500 added 9.5 percent this year, while the Nasdaq Composite rose 7.5 percent for their biggest gains since 2014.
Tougher Headwinds For Vendors
While the surviving active lifestyle retailers had a good year on the market, the exit of their non-surviving peers spelled more trouble for industry vendors. With 463 stores leaving the marketplace in Sports Authority’s collapse, many brands were left scrambling to make up for the lost shelf space. The bankruptcies of Vestis Retail Group LLC (Eastern Mountain Sports, Bob’s Stores, Sport Chalet), Pacific Sunwear and Golfsmith last year, as well as City Sports’ liquidation, also led to concerns about the underlying fundamentals in the sector. Some vendors were also impacted by overall softness across retail with the department-store channel also announcing a number of closings.
Nike (NYSE:NKE), whose stock fell 18.7 percent in 2016, notched its first annual decline in eight years. Beyond any problems with its retail customers, some investors were concerned that Nike was facing greater competition, including a resurgent Adidas, Under Armour with its recent Steph Curry success and a whole crop of newer athleisure players.
Under Armour’s (NYSE:UA) stock similarly took a breather this year, sliding 30.2 percent, amid growth concerns with its sales particularly impacted by Sports Authority’s exit. On the bright side, Adidas’ results rebounded over the last year with a particularly strong performance from its lifestyle offerings, helping the stock rebound 61.7 percent in 2016.
After climbing strongly for four straight years, Skechers U.S.A. (NYSE:SKX) took a break in 2016, giving back 18.6 percent as growth slowed. Skechers’ shares closed the year at $30.21, still way up from $4.04 on an adjusted basis at the close of 2011. VF Corp. (NYSE:VFC) and Hanesbrands (NYSE:HBI) also lost ground. Crocs (Nasdaq:CROX) declined again, as its turnaround efforts so far haven’t propped up sales.
It was a tough year for firearms stocks, with double-digit declines for Sturm, Ruger & Co. (NYSE:RGR), Vista Outdoor (NYSE:VSTO) and Smith & Wesson Corp., which just changed its name to American Outdoor Brands Corp. (Nasdaq:AOBC). Despite a run-up in firearm sales due to concerns over tighter gun control regulations and the election, most investors are predicting the boom has reached its peak. All three companies are looking to diversify their businesses to reduce their exposure to the politically charged firearms category.
Perhaps the biggest disappointment for the investment community was the steep declines seen by GoPro (Nasdaq:GPRO) and Fitbit (NYSE:FIT). The poor showings have cooled interest in the once-hyped wearable space.
The following is a roundup of 2016’s stock performance for the industry’s major players:
|Johnson Outdoors Inc.||$21.89||$39.69||81.3%|
|Big 5 Sporting Goods Corp.||$9.99||$17.35||73.7%|
|Dick’s Sporting Goods, Inc.||$34.99||$53.10||51.8%|
|Delta Apparel Inc.||$14.04||$20.73||47.6%|
|Iconix Brand Group Inc.||$6.83||$9.34||36.7%|
|Perry Ellis International, Inc.||$18.42||$24.91||35.2%|
|Wolverine World Wide Inc.||$16.71||$21.95||31.4%|
|Vail Resorts, Inc.||$127.99||$161.31||26.0%|
|Lululemon Athletica Inc.||$52.47||$64.99||23.9%|
|Hibbett Sports Inc.||$30.24||$37.30||23.3%|
|West Marine Inc.||$8.49||$10.47||23.3%|
|Black Diamond Inc.||4.42||$5.35||21.0%|
|Columbia Sportswear Co.||$48.76||$58.30||19.6%|
|Deckers Outdoor Corp.||$47.20||$55.39||17.4%|
|Callaway Golf Co.||$9.42||$10.96||16.3%|
|Shoe Carnival Inc.||$23.20||$26.98||16.3%|
|Weyco Group Inc.||$27.22||$31.30||15.0%|
|Compass Diversified Holdings LLC||$15.89||$17.90||12.6%|
|Foot Locker Inc.||$65.09||$70.89||8.9%|
|The Finish Line Inc.||$18.08||$18.81||4.0%|
|Boot Barn Holdings Inc.||$12.29||$12.52||1.9%|
|Newell Brands Inc.||$44.08||$44.65||1.3%|
|Rocky Brands Inc.||$11.56||$11.55||-0.1%|
|American Outdoor Brands Corp. (Smith & Wesson)||$21.98||$21.08||-4.1%|
|Sturm, Ruger & Co. Inc.||$59.61||$52.70||-11.6%|
|Vista Outdoor Inc.||$44.51||$36.90||-17.1%|
|Skechers U.S.A., Inc.||$30.21||$24.58||-18.6%|
|Sportsman’s Warehouse Holdings Inc.||$12.90||$9.39||-27.2%|
|Under Armour Inc.||$41.64||$29.05||-30.2%|
|G-III Apparel Group Ltd.||$44.26||$29.56||-33.2%|
|Sequential Brands Group Inc.||$7.91||$4.68||-40.8%|
|Performance Sports Group Ltd.||$9.63||$1.49||-84.5%|