SGB 2024 Year in Review: Active Lifestyle Stocks Under Pressure Again in 2024

The majority of stocks trading in the active lifestyle space in 2024 underperformed robust broader market gains that saw the S&P 500 jump more than 20 percent for the second year in a row. For the third consecutive year,  stocks in the active lifestyle market were impacted by inflation woes, tepid consumer spending and the larger public companies, including Nike, Lululemon, Columbia Sportswear and Topgolf Callaway Brands, all lost sales momentum.

The S&P 500 surged 23.3 percent in 2024, spurred by enthusiasm from rate cuts, economic strength and hype over artificial intelligence (AI) that drove significant gains for several tech stocks, led by Nvidia, Tesla and Meta Platforms. Building on 2023, the two-year gains for the S&P 500 of 53 percent marked the highest since the nearly 66 percent rally in 1997 and 1998.

In other broader indexes, the Dow added 12.9 percent in 2024, while the Nasdaq outperformed with a gain of 28.6 percent.

By comparison, of 83 stocks in the active lifestyle space tracked by SGB Executive, only 19, or 23 percent, outperformed the 23.3 percent gain by the S&P 500, while 48 stocks, or 58 percent of the tracked active lifestyle issues, declined.

Active lifestyle stocks also underperformed the broader indexes in 2022 and 2023 after delivering oversized gains in 2021 and 2020. The industry initially benefited in the early stages of the pandemic from heightened interest in outdoor and fitness activities, but outdoor participation levels in many activities largely reverted back to pre-pandemic levels – especially at the core level.

Beyond inflationary pressures that impacted spending in discretionary categories in 2024, pandemic-triggered supply chain bottlenecks led to bloated inventories, particularly in the outdoor channel, requiring steep discounts to clear out built-up inventory levels over the last two years.

Among the winners, Wolverine World Wide (WWW) garnered the top growth spot among active lifestyle businesses, jumping nearly 150 percent in 2024 to close the year at $22.20 a share. The parent of Merrell and Saucony recently raised its full-year outlook as management repositioned efforts to drive an inflection back to growth.

Adidas (ADS.F) was the second largest gainer in 2024 as company shares climbed 133 percent year-over-year. Results came in better than expected due to strong demand for the brand’s retro-style Gazelle and Samba sneakers and a final resolution of the Kanye West and Yeezy issues.

Deckers Brands (DECK), parent of Ugg, Hoka and Teva, underwent a six-for-one stock split in September 2024, and increased 80.4 percent for the year as continued gains by Hoka led earnings to fly past analyst targets. The stock has surged over seven-fold in the last five years.

On Holdings (ONON), which recently raised its full-year 2024 net sales growth outlook to at least 32 percent on a constant-currency basis, jumped 103 percent to close 2024 at $54.77 per share. The stock’s price has more than doubled since going public at $24 a share in August 2022.

VF Corp. (VFC), parent of The North Face, Vans, Timberland and Dickies, recovered somewhat during the year, gaining 14.1 percent to end the year at $21.46 a share, with some progress made under a restructuring plan led by CEO Bracken Darrell. The stock remains well below its all-time high of $100.25 per share reached in January 2020.

Among retailers, Dick’s Sporting Goods (DKS), which raised its annual guidance after every quarterly report last year, was rewarded by investors with a 55.7 percent share price gain in 2024. Shares have surged 460 percent over the last five years.

Boot Barn (BOOT), which has capitalized on the cowboy boot trend, slightly more than doubled its share price to $54.77 per share from $26.97 per share at the end of 2023.

Urban Outfitters, Burlington Stores, Amazon, Costco, eBay, and Nordstrom all delivered gains of over 30 percent.

Among the laggards, Nike (NKE) shares rose as high as $90.62 following news in September that the company rehired Nike veteran Elliot hill as CEO but has since retreated to close the year at $75.67 per share, down 30.3 percent year-over-year. Nike cautioned that a return to growth will take longer than some had hoped. Nike stock reached an all-time high of $179.10 in November 2021.

Foot Locker (FL), Nike’s largest customer, lost 30.1 percent to $21.76 per share at year-end.

Lululemon’s LULU shares gave back 25.2 percent to $382.41 in 2024 on concerns over slowed North American growth and an issue with its Breezethrough product line. Shares remain up 65 percent over the last five years.

Academy Sports & Outdoors (ASO) saw its first annual share price decline since going public in October 2020, losing 12.8 percent, as the retailer had to scale back its guidance for the year due to softer spending by its value-conscious consumer.

Topgolf Callaway Brands (MODG) shares fell 45.2 percent for the year to $7.86 a share amid sluggish sales at its Topgolf business, leading the company to propose a spinoff of the Topgolf entertainment business.

Elevated inventories in many active outdoor categories and cautious ordering stances by retailers led to softer-than-expected sales for many vendors in the outdoor space. Sturm, Ruger & Co. (RGR), Smith & Wesson (SWBI) and Yeti (YETI) saw share declines of over 20 percent, while shares fell more than 30 percent at Black Diamond parent Clarus Corp. (CLAR) and Johnson Outdoors.

Shares of Fox Factory Holding Corp. (FOXF), which faced heavy discounting to clear inventories in the IBD channel, retreated 55.1 percent for the year.

Allbirds (BIRD), which underwent a 1-for-20 reverse stock split in September, closed at $6.97, down 53.5 percent for 2024. On a split-adjusted basis, the former direct-to-consumer darling went public in November 2021 at a price of $300.

Image courtesy On Running