EXEC: Active Lifestyle Stocks Miss Market Rally in 2023

The broader stock market saw a robust recovery in 2023, but the majority of stocks in the active lifestyle space underperformed, marked by declines by industry bellwethers, including Nike, VF Corp. and Columbia Sportswear.

Of the 87 stocks in the active lifestyle space tracked by SGB Executive, only 29, or one-third, performed better than the 24.2 percent gain in 2023 seen by the benchmark S&P 500 Index. 

The broader market, with strength among tech stocks, was helped by a resilient economy, easing inflation and the prospect of lower interest rates; however, shares of several vendors and retailers in the active lifestyle space in 2023 took a hit as they were forced to gradually reduce annual guidance over the last year as markdowns were necessary to clear elevated inventories. 

Inventories grew as pandemic-triggered supply chain bottlenecks eased and demand slowed for some categories that had surged during the earlier stages of the pandemic. Inflationary pressures also impacted spending in discretionary categories.

Active lifestyle stocks also underperformed the broader indexes in 2022 after delivering oversized gains in 2021 and 2020. Due to heightened interest in outdoor and fitness activities, results for many retailers arrived well above expectations in the earlier stages of the pandemic.

Many stocks in the active lifestyle sector now trade below levels reached at the close of 2019, the last year before the pandemic arrived.

Among stocks hit the hardest, VF Corp. shares were down 31.9 percent in 2023 to close the year at $18.80 and have been off 81.1 percent since closing 2019 at $99.66. In June, VF hired Bracken Darrell as CEO as the company’s continued struggles with Vans’ turnaround were compounded by challenges managing high inventories in the outdoor channel and apparel overall.

Elsewhere in the outdoor space, shares in 2023 were down 9.2 percent at Columbia Sportswear, off 18.7 percent at Wolverine World Wide and down 12.1 percent at Black Diamond’s parent Clarus Corp. All three stocks are now trading below pre-pandemic levels.

Peloton Interactive had soared to an all-time high of $167.42 in January 2021 on investor bets on the at-home fitness craze but closed 2023 at $6.09, down 23.3 percent for the year. Bowflex, formerly Nautilus, surged to $18.14 in 2020 but closed in 2023 at 77 cents.

Nike, which spent much of 2023 discounting product to rebalance inventories, fell 7.2 percent to close the year at $108.57. Nike’s shares had risen to an all-time high of $173.12 in November 2021 but now trade only slightly above its pre-pandemic 2019 close of $101.31.

Under Armour, which hired Marriot executive Stephanie Linnartz as CEO last year to reignite growth, lost 13.5 percent of its value in 2023 and is down slightly more than one-half from its 2019 close.

Adidas’ shares recovered, climbing 50.1 percent on signs that its new CEO Bjørn Gulden, formerly of Puma, was making progress repositioning the brand for growth. Shares continue to be down about 40 percent from their 2019 close.

Among suppliers that have held onto their share gains over the pandemic, Deckers Outdoor Corp. continued stellar growth for Hoka, soaring 67.5 percent in 2023 to $668.43. Shares increased nearly four-fold versus its 2019 close of $168.86. On Holding’s shares jumped 57.2 percent in 2023 to $26.97, surpassing its September 2021 IPO price of $24.

Shares of Skechers U.S.A. and Acushnet Holdings Corp., the parent of Titleist, vaulted about 50 percent in value in 2023, while Yeti’s shares bounced back with a gain of 25 percent last year. All three stocks are trading comfortably above pre-pandemic levels.

Among retailers, sporting goods chains faced pressures, but investors continued to reward them for keeping their sales and margins elevated versus 2019 levels. Shares of Dicks rose 22.2 percent last year and are up nearly three-fold against 2019. Academy Sports’ shares advanced 25.6 percent to $66 and have catapulted five-fold since being priced at $13 in its August 2020 initial public offering. Shares of Hibbett gained 5.6 percent in 2023 but more than doubled since 2019.

Lululemon’s shares leaped 59.6 percent to $511.29 and increased more than two-fold since closing at $231.67 in 2019. Gap, Amazon, Costco, Urban Outfitters, Famous-Footwear parent Caleres, and Shoe Carnival also delivered strong gains for investors in 2023.

Among retail laggards, shares of Sportsman’s Warehouse fell 54.7 percent in 2023 amid weakness in the hunting space. Shares of Foot Locker gave back 17.6 percent and Journeys-parent Genesco lost 23.5 percent.

Photo courtesy Hoka