The annual state of the industry report from the Sports and Fitness Industry Association (SFIA) reveals that 55.2% of sporting goods and fitness firms increased profitability in 2022, the second highest figure since 2015. The proportion of respondents who reported a year-over-year decrease in profitability, however, was 28.4%, which is still much higher than pre-pandemic levels.
The report attributes this trend to macroeconomic factors, such as the 6.5% U.S. inflation rate for the 12 months ending in December, which makes consumers less likely to buy discretionary products. Indeed, despite 4.3% sales growth in sports, fitness, outdoor and athletics products in 2022, spending declined in certain key categories, such as apparel. This is following a 2021 in which there was 15.8% growth in sales across the industry.
This moderate sales growth in 2022 contributed to 67% of companies reporting increased inventory levels compared to 2021, while only 12% who reported lower inventories in ’22. The bigger reason for this change, though, was the increasing normalization of the supply chain following pandemic-related disruptions.
The return to full capacity production combined with the delivery of delayed merchandise orders from the prior season has actually led to inventory headaches for some companies. Thirty-seven percent described their inventory levels as “very uncomfortable”or “somewhat uncomfortable,” as opposed to 27% responding with “very comfortable” or “somewhat comfortable.”
Businesses are already planning ahead to reduce the impact of potential future supply chain failures. Twenty-four percent of companies said they planned to manufacture more in the U.S., up from 17% in 2019.
The report notes that the looming threat of a recession makes this a complicated time for any business, and that “many public companies have already called 2023 a ‘transition year’ for resetting their respective businesses ahead of stronger growth in both 2024 and 2025.”
Despite this uncertainty, there is positive news for the fitness industry: 77.6% of Americans were physically active in 2022, marking an increase for the fourth consecutive year despite massive societal changes. And 51.7% of Americans could be considered "core" actives, meaning those who participated in a particular sport or activity frequently enough to reflect a passion for it; that percentage has steadily increased since 2017.
