Analysts and dealmakers on Wall Street, as well as consultants in the space, see the active lifestyle sector continuing to face headwinds in 2026, particularly the likelihood that tariffs will force another round of price hikes, further restraining discretionary spending. However, they also see room for optimism.
Demand is expected to remain supported by strong interest in healthy lifestyles, sports, and outdoor activities, with a likely boost from the Winter Olympics and World Cup. Lean inventory levels in the marketplace should present opportunities for retailers to better capitalize on trends than in recent years. Other potential sales drivers include favorable tax returns, potential tax reform, government stimulus, and a potential scale-back in tariffs.
Nonetheless, inflationary pressures will likely continue and could mount further with an emphasis on value and differentiation expected to be critical for both vendors and retailers.
This is the first installment in a series of articles from SGB Media exploring the industry’s outlook for 2026, with future reporting to include the viewpoints of vendors, retailers, component companies, and trade organizations in the active and outdoor lifestyle space.
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Ike Boruchow
Managing Director, Equity Research Analyst, Retailing, Specialty Softlines, and E-Commerce, at Wells Fargo Securities
“Health of the Consumer: While we continue to see a winners/losers setup, bigger picture, we lean more positive on the space entering 2026 due to 1) better-than-feared early holiday reads, 2) benefits from tax reform (esp 1H26) and 3) optionality on tariff repeal/refund. Consumer spending habits in 2025 were largely informed by tariffs and promos, often trending hand-in-hand, creating episodic shopping patterns. Entering 2026, we’re more optimistic, as tax reform benefits (esp. 1H) flow through to middle-income shoppers (relatively weaker in 2025), which most likely boosts discretionary spend, but not large enough to spend on ‘big ticket.’ That said, the lower-income cohorts likely continue to struggle (stimulus-focused elsewhere).
“Talkin’ Tariffs: Interestingly, the key tariff theme entering 2026 is repeal/refund. While fluid, early indications could suggest both reversing a majority of tariffs implemented to date and a refund of tariff revenue collected, which could create a material tailwind to our space (group has absorbed 150 to 200 basis points (bps) of tariff headwind. In a Bull Case, we would see 1) Under Armour (UAA), 2) Carter’s (CRI), 3) Capri Holdings Limited (CPRI), 4) Victoria’s Secret & Co. (VSCO), and 5) Gap Inc. (GAP) as key “tariff reversal” winners, based on the amount of tariff absorbed relative to operating margin (OM) levels.
“Talkin’ Tariffs, Part 2: Digging deeper into the subject, we highlight work from our macro strategy team, as well as our own bottom-up analysis, showing that our sector would be among the largest beneficiaries should tariffs be reversed, with a potential ~15 percent benefit to EBIT. We have seen a material negative impact from tariffs to date across our space, which could potentially bring back hundreds of bps of margin, not including a refund with >$90B collected to date under IEEPA.”
Eoin Comerford
Principal, Outsize Consulting, Advisors to Outdoor/Active Industry; The Rock Fight Podcast Co-Host & Consigliere
“Outdoor brands’ sales will likely get off to a slow start in 2026. Retailers have been conservative with preseason orders, placed during the height of tariff turmoil last summer. In addition, many brands are only now introducing price increases to offset at least some of the tariff impact. These increases will hit an already strained consumer, leading to reduced demand for all but the hottest brands and categories. While dollar sales may be close to flat, unit sales are likely to be down in the high single digits.
“Projecting later into the year is almost impossible given the high level of economic uncertainty created by the ever-changing policies of the current administration on both domestic and international fronts.
“There are a few reasons for hope. First, we could see a rollback in tariffs, whether due to the Supreme Court or a pullback by the administration in response to flagging poll numbers. Second, outdoor participation rates remain at record highs, and those participants will continue to need the gear and apparel to support their activities. Third, core outdoor industry consumers tend to be older and more affluent, so they have been less impacted by the affordability crisis.”
David Durkin
Co-Owner, Karnan Associates, a consultancy for the run specialty space
“Running into 2026, we are looking forward to working with specialty run shops to continue to innovate and grow alongside the historic momentum of running as an activity and sport. We anticipate more doors will open and that existing shops will find new ways to reach and create runners.
“As brands continue to innovate their products, we see increasing opportunities for the specialty channel to be an avenue of product introduction, education and fulfillment. To reach the growing number of runners, we expect to see increasingly creative and deep collaborations between brands and retailers. This may include pop-up or co-branded spaces, heavily branded and targeted marketing activations, and increased linkages between clubs, influencers, brands, events, and retailers. With the addition of new doors and the impact of unique marketing activations, channel sales in 2026 should more closely mirror the overall growth of running.
“Building on their high level of service, experience and deep roots in their local communities, specialty running shops will remain at the heart of both the running community and the running industry.”
Sucharita Kodali
VP, Principal Analyst, Forrester, a research and advisory firm
“The retail landscape is entering a period of profound transformation, where profitability will no longer be optional but instead essential for survival. The combination of persistent high interest rates and technological disruption will create a challenging environment across all retail sectors — from low-margin categories such as grocery to high-margin ones like apparel.
“Retailers face a perfect storm: Higher wages, waning consumer confidence and intensifying competition will force merchants to innovate to maintain customer loyalty and market share. Incremental improvements simply won’t cut it — success demands organizational readiness to invest in technology solutions, embrace experimentation and learn from failures. From bankruptcy waves to AI-powered shopping assistants and stricter return policies, the retail industry stands at a crossroads where traditional business models face pressure to lower costs.”
Brian Little
Managing Director, Lincoln International, a Chicago-based mid-market investment banking firm
“The active and outdoor consumer sector enters the year ahead in a more normalized, but still selective, growth environment. Consumer interest in active lifestyles remains strong, though discretionary spending is increasingly value-driven as households contend with lingering inflation. Brands that clearly articulate performance, durability and authenticity continue to win share, while sustainability remains an important differentiator.
“From an operating standpoint, cost pressures have moderated but not disappeared. Tariff uncertainty, geopolitical risk and supply chain complexity are pushing brands to diversify sourcing and invest in tighter inventory and demand planning. Those that adapted early are now better positioned to protect margins and support growth.
“M&A activity in the middle market remains constructive. Strategic buyers and private equity are actively pursuing differentiated brands with strong unit economics, repeat purchase behavior and clear paths to scale. Valuations remain healthy for high-quality assets, though buyers are increasingly disciplined and focused on profitability and cash flow over pure top-line growth.
“Overall, the sector is transitioning from recovery to disciplined expansion, creating meaningful opportunities for well-positioned brands and thoughtful acquirers alike.”
Paul Martin
Global Retail Growth Leader, AlixPartners, a financial advisory and consulting firm
“While the overall projected spending trend for 2026 is one of further contraction, the [Retail and Consumer Products] sector and demographic specifics show that retail brands still have much to go after next year. Pockets of expansion are rare, though, so success will rely on taking share from competitors rather than through a market uplift, which may be one or two years away. Retailers must differentiate — finding what others lack or cannot credibly deliver — and act decisively to capture this spend. The split between food and non-food retail is stark. Grocery demonstrates resilience, while more discretionary categories such as fashion, DIY, and sporting goods face declining volumes and margin pressure.
“Irrespective of these overall trajectories, though, there will be opportunities ‘between the lines’ of every sector. Consumers are open to trading down from luxury or mid-market brands or products, and increasingly prioritizing health and value—fewer purchases, perhaps, but the pursuit of better quality. Brand switching is now commonplace, requiring operators to understand the missions driving these shifts and quickly respond.
“Premiumization also harnesses this stratification of buying behaviors: while luxury may be under pressure, the premium and value segments that expertly position their products can outperform the embattled middle, as shoppers become more discerning in their choices.”
Peter McGoldrick
VP, Lifestyle Brands, Stifel, Investment Bank
“We anticipate modest growth and stabilizing fundamentals in 2026. The year features a favorable event calendar, with the Winter Olympics and FIFA World Cup driving excitement and engagement across the athletic space. Rising participation in active lifestyles and consumer preference for products with performance attributes provide thematic demand support. Marketplace inventory levels appear generally aligned with demand. Despite higher prices, we expect consumers to engage with brands that offer genuine innovation and perceived quality.
“At the macro level, we expect modest U.S. consumer spending growth driven by wages outpacing inflation and a slight tailwind from favorable tax returns. Internationally, European and APAC spending capacity benefits from higher savings rates and moderating inflation. While China remains a compelling long-term opportunity, near-term sentiment is dampened by wealth-effect headwinds.
“A historic valuation discount for Lifestyle Brands underscores selective opportunity. A full year of U.S. tariffs poses challenges for both consumers and businesses, but these effects appear appropriately reflected in estimates. For stock selection, we favor 1) structurally improving businesses with tangible drivers, including Wolverine Worldwide, Levi Strauss, and Deckers; 2) underappreciated growth models, including On and Birkenstock; and 3) stocks with capacity for sentiment re-rating, including Under Armour and Columbia Sportswear.”
Matt Powell
Senior Advisor, BCE Consulting
“Two economies begin to take a toll. Moody’s states that the Top 10 percent of the income population controls 50 percent of consumption. Consumption here has been driven by the stock market. If (when) the AI bubble bursts, it will have a massive negative impact on the Top 10 percent. The other 90 percent are struggling. Higher health care premiums will hit this group hard. The 90 percent will be a big drag on the economy. Calling this economy “k-shaped” is cute, but it masks the real danger we face here.
“Tariffs will continue to be an issue. We are just now beginning to see the true impact of tariffs on pricing. Brands and retailers have used every trick to try to hold prices down, but we’ve pretty much used all of that up. Inflation remains an issue.
“Affordability/Frugality/Practicality will be important ideas in 2026. Given the above two points, consumers will be concerned about their personal financial situation in 2026. Communicating value (not just price) will be an important story.
“Foot Locker liquidations will be disruptive. As Dick’s ‘cleans out the garage at Foot Locker, we have seen a flood of clearance in the market, forcing other retailers to respond. Then we can expect Dick’s to announce a significant amount of Footlocker store closures, which will further disrupt the market. It will be a very messy year in sneakers.
“Nike continues to make slow progress on the turnaround. Nike is doing all the right things to turn the brand around, but many of the initiatives will take time. I expect things will get progressively better, but don’t expect Nike to come roaring back any time soon.
“All in, another challenging year for the sneaker game. Those brands and retailers that stay fresh, respond quickly and manage the market can outperform.”
Nate Pund
Global Head of the Active Lifestyle Investment Bank, Houlihan Lokey
“I forecast that the M&A landscape for the Outdoor/Active Lifestyle sector will be poised for a significant acceleration in 2026 based on the confluence of three key tailwinds: resilient consumer spending, the resolution of tariff-related uncertainty, and a mounting imperative for private equity funds to generate liquidity.
“The 2025 holiday season, while marked by more deliberate and value-oriented consumer behavior, demonstrated the continued willingness of households to allocate discretionary funds toward trusted brands and experiences. This sustained spending provides a critical foundation of confidence for both strategic acquirers and financial sponsors evaluating investments in the sector.
“For the past several years, ambiguity surrounding the scope and longevity of tariffs has acted as a significant brake on M&A activity, creating valuation gaps that proved difficult for buyers and sellers to bridge. While the prospect of sustained tariffs represents an ongoing cost layer for many businesses and ultimately consumers, the emerging clarity on trade policy removes the paralyzing uncertainty that previously hindered deal flow.
“Lastly, and perhaps most significantly, will be the immense pressure on private equity firms to monetize their portfolios and free themselves up for future investments. The private equity industry is currently sitting on a record backlog of unsold companies, a result of extended holding periods caused by higher financing costs and market volatility. This ‘exit bottleneck’ is expected to significantly increase the supply of high-quality companies coming to market in 2026, with sponsor-to-sponsor transactions and strategic sales being the most credible exit routes.”
Walt Shepard
Principal, BCE Consulting
“Overall Industry Growth Outlook: Low Single-Digit, Uneven Growth: The broader outdoor industry will continue to experience low single-digit growth or stagnation in 2026, with meaningful divergence between winners and laggards.
“Incremental Apparel Innovation, Limited Consumer Pull: In 2026, most outdoor apparel categories will continue to see incremental innovation that does not materially expand demand, resulting in limited consumer pull outside a small number of relevant brands (e.g., Vuori).
“Continued Retail De-Emphasis on Hardgoods in Generalist Channels: The largest retailers – outdoor-focused or not – will continue to reduce outdoor hardgoods floor space in favor of apparel and footwear.
“Demand & Inventory Planning as a Competitive Advantage: In a low-growth environment, inventory precision and demand planning execution will increasingly separate winners from losers. Operational excellence becomes a growth lever, not just a cost-control function.
“Footwear as a Relative Growth Engine, Led by Trail Running: Footwear will outperform apparel in 2026, with trail running emerging as a stronger growth and storytelling driver, drafting on the success of performance (road) running.
“Continued Rise of Specialist Brands: Specialist brands with a narrow, technically credible point of view will continue to take share from over-assorted incumbents.”
Matt Tingler
Managing Director, RW Baird’s Global Consumer Investment Banking Group
“Despite market turmoil caused by geopolitical volatility and tariffs, we had a great year and continued to deliver outstanding results for our clients, including the sale of golf industry disruptor LAB Golf to L Catterton, a premier investment firm focused on the consumer market.
“We are optimistic about 2026 and expect deal activity to meaningfully pick up in the new year.
“We have a strong backlog of opportunities that continues to build, and we expect buyers, both corporate and private equity, will be hungry for acquisitions after a slow 2025.
“We see multiple factors supporting greater activity, including corporate buyers leveraging strong balance sheets and looking to M&A to accelerate growth; private equity utilizing vast amounts of ‘dry powder’; moderating interest rates, which should stimulate capital investment; and government-driven stimulus that should activate consumer spending, among other drivers.
“Additionally, we see a return of the IPO market for consumer businesses in 2026 that will generate broader investor enthusiasm, thereby stimulating deal activity in both the private and public markets.”
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