Tennis-related stocks surged in August, leading an end-of-summer rally in sports shares that pushed the Sportico Sports Stock Index to its highest level in more than a year.
Both Amer Sports, which owns tennis racket maker Wilson, and the Roger Federer-backed On Holdings each surged more than 20% in August as they reported strong quarterly earnings powered by tennis-related products. The strength helped the Sportico index close the month at 1,234, its highest level since August 2023.
Swiss shoemaker On (ONON, up 21%) in particular continues to show huge growth in its tennis shoe-based business. Sales in its most recent quarter reported early in August were up nearly 28% to 567.7 million Swiss francs (about $668 million). The Roger, a collection of Federer-branded tennis shoes selling between $100 and $200 a pair, is among the company’s strongest lines. Management noted the tennis icon starred in a commercial playing air tennis with singer-actress Zendaya that was viewed more than 23 million times across TikTok and Instagram. The company says its overall sales for 2024 should be 30% higher, continuing its momentum in the stock market. On shares are up 72% in 2024, closing the month at $46.45.
“On shoes are nothing that the consumer has seen before. They’re like nothing that the consumer has felt before on their foot, and so it’s something that is new and exciting,” Wedbush Securities equity analyst Tom Nikic told Investors Business Daily Friday.
Tennis strength also helped Amer Sports (AS, up 20%) in its earnings reported last month. The company’s sales rose 16% in its second quarter, highlighted by a rebound in the Wilson brand, which entered the year with a double-digit sales slump attributed at the time to too much inventory built up by wholesalers. Amer said tennis, along with basketball, was particularly strong, and announced plans to open Tennis360 retail stores in mainland China, Amer’s main market. One of Amer’s largest shareholders is Lululemon billionaire Chip Wilson, whose stake in the business appreciated by more than $244 million in the month thanks to the share rally.
The other apparel stocks in the Sportico index, Nike (NKE, up 12%) and Under Armour (UAA, up 10%), also posted strong advances, even as they both reported weaker sales in their most recent quarters. Call it managing the expectations game well, since while Nike’s 2% quarterly decline and Under Armour’s 10% sale drop suggest some headwinds in shoes and apparel. Yet both beat Wall Street’s expectations for top-line results.
Overall, 23 of the 40 stocks in the Sportico Sports Stock Index posted gains in the month.
Fintech Shift4 Payments (FOUR, up 21%) benefitted from strong sales in its sports and entertainment division. The company, which provides point-of-sale and in-arena mobile ordering tech as well as digital wallets for concessions, retail, parking and tickets, signed up a slew of new sports clients over the summer, including the Miami Heat, Chicago Bears, Indianapolis Colts, and Indiana Pacer –the latter two of which also struck ticketing deals with the company. Shift4 Payments also reported strong signups of sportsbooks locations and mobile customers. It will also be the processor for all of BetMGM’s locations by next year.
Other notable winners were sports-centric streaming bundler Fubo (FUBO), which scored a (preliminary) David-like blow against the Goliath of Disney (DIS, down 4%), Fox (FOX, up 7%) and WarnerBrothers Discover by convincing a judge to halt the launch of Venu, the trio’s own sports-focused streaming bundle. Fubo CEO David Gandler has said the company is in a “duel to the death” with Venu, arguing that the service advances anti-competitive practices by the networks. Fubo shares gained 13% in August.
The 17 decliners in the month mainly consisted of broadcasters and sports books. The biggest drop came from Bowlero (BOWL, down 14%), the owner of the Pro Bowlers Tour and the largest bowling alley operator in the U.S. The weakness appears to be lingering concerns over how many consumers have been hitting the lanes, although Jefferies analyst Randal Konik believes the chain has been experiencing strong foot traffic over the summer and that a summer “season pass” offering has pulled in more than $6 million additional revenue. Bowlero will report earnings Thursday.
The Sportico Sports Stock Index is a basket of 40 stocks that rely on sports for a significant part of their growth. The index includes sports organizations like Manchester United (MANU, up 2%), data and analytics providers such as Genius Sports (GENI, up 14%) and venue operators like Sphere Entertainment (SPHR, up 10%). The index is equal weighted, meaning each stock begins each quarter at 2.5% of the total index and then is rebalanced three months later. The index is up 7% year-to-date. It debuted at 1,000 in August 2020.
