The megatrend towards health and fitness is likely to accelerate as a result of Covid-19, even in a recession, according to Monik Kotecha at Insync Fund Managers.
Insync anticipates the $4 trillion athleisure health and wellness industry to continue to expand for another 30+ years. Covid-19 is accelerating this powerful trend toward wellbeing.
One of the most significant drivers of the Covid-19 mortality rate in addition to age, according to research by Harvard University, has been obesity. Data from France, the US and UK have shown that a significant proportion of patients in intensive care also tend to be overweight and obese. In New York City, a study of 4,000 Covid-19 patients found that obesity is the second strongest predictor after age.
The athleisure megatrend is just one of the tailwinds behind Insync’s recent reinvestment in Adidas (we sold our holding a while ago as it had reached its then price target).
ADIDAS
Adidas is one of the most innovative companies in Europe, clocking in at number 10 of all industries combined in the 2019 BCG global rankings. Adidas has multiple qualities that point to it being successful in a rapidly changing and highly disruptive industry including:
- creating products with wide ranging appeal,
- tapping into new demand in emerging markets,
- growing faster than wider apparel and footwear spending in mature developed markets
- scaling e-commerce (from zero to +€1.5bn of sales in ten years) and growing.
Adidas’ expertise overlaid on the persistent premium growth of spend on sportswear and related categories, along with the shift toward direct-to consumer sales, has Insync expecting sales growth in excess of global GDP in the years ahead. This should translate into higher margins and returns on invested capital given its management skill and track record.
Thrive through a recession – invest with Insync.
For more information, visit Insync’s April newsletter
Related: Adidas Runs Ahead – Athleisure, 3D Printing and Personalisation
Mr Monik Kotecha
CIO
Insync Funds Management
02 8094 1255
0413 768 480
mkotecha@insyncfm.com.au
www.insyncfm.com.au