Sporting goods are one of the rare winners from the Covid-19 outbreak amid a decimated discretionary retail industry: we expect U.S. retail sales of sporting goods to hit an all-time high of USD48bn in 2020. After falling in March and April because of state-wide retail restrictions, U.S. retail sales of sporting goods recovered significantly in May, boomed in June and have kept growing at double-digit rates ever since amid growing enthusiasm for sporting activities. From January to August, they were up +9.9% year-on-year. 

The segment’s strong performance does not entirely come as a surprise. Over the past twenty years, sales had already displayed strong growth of about +2.9% per annum, second only to e-commerce. The increasing demand for performance gear among amateurs, the progressive casualization of the work dress code as well as the more recent “athleisure” trend (sportswear as fashion wear) have proven strong tailwinds in a country home to leading sportswear brands Nike and Under Armor. We believe this momentum could last well into 2021 for three main reasons:

• Sporting goods sales are largely inelastic to GDP – correlation to GDP stands at 0.29 vs 0.74 for fashion stores and the segment came out largely unharmed from past recessions. 
• We anticipate a K-shaped recovery for the U.S. economy , with strong dispersion in growth between economic sectors. This will typically translate into reduced consumer spending for activities that are seeing limitations and restrictions, freeing up purchasing power for goods and services that are both available and in demand.
• Anecdotal evidence suggests the sanitary crisis has prompted a fraction of the population to adopt healthier lifestyles – including more time dedicated to sporting activities. 

What may have taken the industry by surprise is precisely the pace at which consumers have adapted to the new normal. Though several large fitness chains have gone bankrupt since March and restrictions remain on collective sporting activities, sports enthusiasts seem to have maintained and even increased their routine. Looking at search data for sporting activities that can typically be done from home using a popular video streaming service, we observe a peak in demand related to fitness, yoga and Pilates workouts in April and May, with interest still up 40% to 80% from last year as of October 2020. The same survey conducted in January and late July 2020 by market research firm Civic Science also shows a significant increase in sports engagement even after the most severe restrictions on activity were lifted.