Outdoor Recreation Market Update – March 2025

Product Development and Technology Integration Expected to Drive Sales and M&A in Outdoor Recreation Market Recovery

The Outdoor Recreation & Enthusiasts sector has continued to grapple with the consequences of abnormal expansion during 2020 and 2021, but many businesses have found ways to take market share and capture spending in this fickle operating environment. As a result, the Outdoor Recreation Merger and Acquisition (M&A) market has remained frothy. Inventory overhang has weighed on sector participants’ balance sheets and created a prolonged promotional environment while tepid outdoor activity interest and a challenging macroeconomic backdrop have compounded revenue growth headwinds. Leading companies have increasingly turned to technology-enabled products, innovation, and creativity to re-engage consumer bases, renew excitement in the sector, and drive sales. While significant revenue tailwinds have yet to materialize, outdoor recreation players have remained cautiously optimistic that sector growth will accelerate in 2025 alongside continual inventory right-sizing.

Strategic and financial buyers’ acquisition criteria is increasingly focused on outdoor recreation companies that invest in technology and data analytics to leverage customer insights and enhance product innovation, design, performance, and experience. This was a common theme in discussions and exhibits at the Shooting, Hunting, and Outdoor Trade Show (SHOT Show).

Peter BaileySenior Director, Capstone Partners

Outdoor Recreation Market Participants Continue to Grapple with Excess Inventory and Promotional Environment

Outdoor Recreation & Enthusiasts sector spending has remained elevated following lockdown-induced demand for outdoor activities during the pandemic era. Expenditures on Sporting Equipment, Supplies, Guns & Ammunition increased from $68.2 billion in Q4 2018 to $123.9 billion in Q4 2024, according to the Bureau of Economic Analysis.¹ While still elevated, sector spending has grown more modestly since the economic rebound following COVID-19. Notably, spending on Sporting Equipment, Supplies, Guns & Ammunition grew 2.7% year-over-year (YOY) in Q4 2024, exemplifying resiliency against inflationary headwinds to consumer spending. Sports and recreation vehicle purchases have come under more strain due in part to elevated financing costs, seeing YOY declines in spending for three out of four quarters in 2024.

After bolstering inventories to meet the pandemic-induced spike in demand, moderated consumer spending has pressured topline growth as outdoor recreation players struggle to unload overstocked inventories. Afflicted sector participants have used aggressive promotions to remove excess stock from balance sheets. Discount pricing has pressured sector participants’ profitability to date, particularly for big-ticket product categories with slow replacement cycles such as boats and enthusiast vehicles. The Recreational Boat & Vehicles segment has seen the starkest YOY declines in revenue, evidenced by public company revenue growth falling 14.1% YOY on average, according to most recent earnings across Capstone’s Recreational Boat & Vehicle index. Public diversified outdoor operators have experienced the second largest dip in revenue, followed by sporting goods retailers and tactical and hunting businesses. Inventory normalization has been a lengthy process, but right-sizing has continued to trudge along, supporting a cautiously optimistic outlook for the sector in 2025.

Technology Integration and Innovation Remains Paramount to Drive Consumer Interest and Sales

While overstocked inventories have contributed to price-related revenue growth headwinds, sales volume has also experienced strain due to softened interest in key sector activities and trends in 2024. Search trends for outdoor recreation categories fell 4.7% YOY during 2024, according to Googe Trends.² Hunting, Camping, and Health, Fitness & Wellness categories saw the largest search declines, dropping 8.2%, 9%, and 12.5% YOY, respectively. Running remained the only topic to see positive trends in search popularity, although observing just a marginal 0.6% YOY increase. While discount pricing has helped attract price-conscious customers and encouraged shopping, waning consumer interest is expected to remain a sector headwind as long as the inflationary environment persists.

As a result of tepid sector interest amid an inflationary backdrop, many companies have increasingly turned to technology-enabled products and innovation to drive consumer engagement, excitement, and ultimately, sales. Several key players launched new products in 2024 to capture wallet share while consumer spending continues to recover. Technology integration and innovation—whether performance-based or for digital engagement—was a common thread across the launches.

On the performance-enhancing end of the spectrum, Escalade (Nasdaq:ESCA) debuted its new Onyx’s Supercell Pickleball Paddle in August 2024. The paddle features proprietary cloud control technology to enhance the paddle’s sweet spot and playing experience. Meanwhile in January 2025, Johnson Outdoors (Nasdaq:JOUT) launched new technology within its existing fishing electronics brand and reiterated innovation’s importance for growth. “In this highly competitive outdoor recreation marketplace, we are strengthening our innovation capability as it is one of the most critical elements to driving growth. For example, in our Fishing business, we recently launched new technology in our Humminbird Brand and we’ve seen positive reception from our retail partners so far, with consumer enthusiasm beginning to build as well,” said Helen Johnson-Leipold, CEO of Johnson Outdoors, in its fiscal Q1 2025 earnings call.³

Merging performance enhancements with social media innovation, American Outdoor Brands (Nasdaq:AOUT) launched the BUBBA Pro Series Smart Fish Scale, marking its first entry into the Catch & Release market. Designed to gamify fishing, the fish scale and application have been met with positive feedback, winning a major industry award and being named the official scale for Major League Fishing. Regarding pure-play digital engagement launches, Topgolf Callaway Brands (NYSE:MODG) released a new Sonic the Hedgehog game in partnership with Sega Games during November 2024. The game launch is expected to help drive brand engagement, bolster its presence in the Youth Sports market, and support a pipeline of future customers. “It creates new energy, excitement, things to talk about, reasons [for] new visitors to visit, and also people to come back again. And so, you’re seeing us improve and increase our frequency of these activities,” noted Oliver Brewer III, CEO of Topgolf Callaway, in the company’s Q3 2024 earnings call.⁴ The game collaboration follows an additional digital game release and inclusive product launch earlier in 2024, Block Party and The Sure Thing. Companies will likely continue to leverage technology integration in the Outdoor Recreation market to enhance value-propositions and consumer engagement.

Outdoor Recreation Market M&A Activity Continues to Gain Momentum in 2025

M&A Activity in the Outdoor Recreation market has continued to build in 2025, with deal volume slightly outpacing the prior year period. In year to date (YTD) 2025, the sector has seen 14 transactions announced or closed compared to 12 in YTD 2024. Strategics have continued to drive dealmaking, contributing 11 acquisitions to the YTD sector total. Private businesses have accounted for the majority (90.9%) of strategic M&A to date. Many strategics focused internally in 2024 with notable brands realigning portfolios and market positioning. Recent actions include Frasers Group’s (LSE:FRAS) divesture of N Brown Group, a clothing and footwear retailer, to Flacon 24 Topco (October 2024, $535 million, 0.7x EV/Revenue, 12.7x EV/EBITDA) and Vista Outdoors’ widely publicized sales of Revelyst to Strategic Value Partners (October 2024, $1.2 billion, 1.0x EV/Revenue, 17.6x EV/EBITDA) and The Kinetic Group to Czechoslovak Group (October 2023, $2.2 billion). Additionally, Topgolf Callaway Brands announced plans to spin off its business into two independent companies, Callaway and Topgolf, in September 2024. However, these recent portfolio realignment efforts have well positioned strategic buyers to pursue inorganic growth through synergistic acquisitions. Assets with strong brands that expand addressable markets via new or complementary products and offer consumer base diversification will likely receive heightened competition in sale processes as more strategic buyers look externally to drive growth.

Private equity groups have contributed three deals to total sector deal volume to date, pacing the prior year period’s total of four deals. Financial sponsor transactions increased 93.3% YOY in 2024, fueling expectations that 2025 will continue a rebound in private equity activity if the Federal Reserve's monetary policy remains favorable. The sector has seen two add-on transactions and one platform deal YTD. Personal interest in outdoor activities has continued to attract family offices to the sector. Sponsors have expressed appetite for brands with technology components in sports and outdoor products, which often bring superior brand appeal and customer loyalty. More than $1 trillion in dry powder remains for private equity firms to deploy in the U.S. Sponsors will likely mobilize capital for new acquisitions more aggressively in 2025 as limited partners continue to pressure funds to generate returns and Credit markets remain more favorable than the peak interest rate environment in 2022 and 2023. The improving backdrop for private equity acquisitions in the Outdoor Recreation market has underpinned a positive outlook for sector M&A moving through 2025.

Portfolio Realignments and Product Innovation Headline Deal Activity in the Outdoor Recreation Market

Portfolio reshuffling and technology-enabled product enhancement have headlined M&A pursuits in the Outdoor Recreation & Enthusiasts sector. A strategic divestment or acquisition of proprietary technology has helped businesses prepare for a market rebound amid inventory overhang and challenged consumer spending. Notable transactions in the Outdoor Recreation & Enthusiasts sector are outlined below.

• Kontoor Brands to Acquire Helly Hansen (February 2025, $897 Million, 1.4x EV/Revenue, 12.5x EV/EBITDA) – In February 2025, Kontoor Brands (NYSE:KTB) announced its acquisition of global outdoor and workwear brand Helly Hansen from Canadian Tire (TSX:CTC.A) for $897 million, equivalent to 1.4x EV/Revenue or 12.5x EV/EBITDA. Kontoor Brands operates as a lifestyle apparel company, namely selling denim under the Wrangler and Lee brands. Of note, outdoor apparel and accessories company, VF Corporation (NYSE:VFC) spun off Kontoor Brands in May 2019, reporting the denim unit did not align with its outdoor and street lifestyle brand portfolio. The transaction is expected to provide an immediately accretive impact to revenue, earnings, and cash flow for Kontoor Brands upon closing. The company identified complementary geographic, category, channel footprint, and exposure to affluent, active, and young consumers as key components to the deal. Additionally, the parties expect to realize supply chain, technology, tax, and other operational synergies as part of the transaction. Helly Hansen is projected to generate $80 million in Adjusted EBITDA for full year 2025 and more than $680 million in revenue, which nearly matches Kontoor Brands’ Q4 2024 revenue ($699 million), according to a press release and the company’s preliminary earnings release.^{5, 6}
• SYNC Performance Acquires RACEtech (December 2024, Undisclosed) – SYNC Performance, a manufacturer and retailer of technical apparel, protective ski race equipment, and travel bags, acquired RACEtech for an undisclosed sum in December 2024. RACEtech develops and produces high-performance alpine ski racing protection products, expanding SYNC’s product line into safety gear. “SYNC is the right company to continue the RACEtech legacy, focusing on athlete feedback while utilizing superior materials and craftsmanship. This is a natural progression in the RACEtech journey, as SYNC Performance shares a commitment to innovation and customer satisfaction,” said Graham Lonetto, Founder of RACEtech, in a press release.⁷ SYNC expects to bring continued advancements in safety, performance, and durability in its products through the acquisition of RACEtech.
• Thule Group Acquires Quad Lock (November 2024, $328.7 million, 10.0x EV/EBITDA) – In November 2024, Thule Group (OM:THULE), a Swedish sports and outdoor leisure company, acquired performance phone mount solutions manufacturer, Quad Lock, for $328.7 million, equivalent to 10.0x EV/EBITDA. The Quad Lock product suite includes mobile device mounts for cycling, motorcycling, driving, running, and photography use cases. The company has done approximately $131.6 million in sales and boasts an EBITDA margin of 25%, with 75% of its sales coming via direct-to-consumer e-commerce channels, according to a press release.⁸ As part of the deal, Thule gains exposure to the Motorcycle Enthusiast market and strengthens its position in the Asia-Pacific region. The acquisition opens attractive cross-selling opportunities and product development synergies via new expertise in electronics and wireless charging. “Quad Lock is a global market leader in its niche and, like Thule, has a passion for creating the best products for active adventurers, with a strong focus on quality and innovation. Welcoming Quad Lock’s talented employees to the Thule family strengthens us in several areas and is a valuable step towards our financial targets for 2030,” noted Mattias Ankarberg, President and CEO of Thule Group, in the press release. Notably, Thule has continued to focus heavily on innovation to drive growth, investing 7% of sales in product development during 2024, according to its Q4 2024 investor presentation.⁹ This marked the largest product development as a percent of sales in the firm’s history, with Thule planning to continue its record product launch pace in 2025.

Despite tepid consumer interest in outdoor activities, a challenging macroeconomic backdrop, and inventory overhang, Outdoor Recreation & Enthusiasts sector participants have continued to push innovation and product development to the forefront of growth initiatives. Technology-enabled product differentiation has emerged as a leading strategy to drive consumer excitement and spending. Many companies have supported this strategic approach with both organic and inorganic execution. A growing appetite for acquisitions in the space is expected to bolster the M&A market rebound moving through the remainder of 2025.

To discuss technology’s growing role in the Outdoor Recreation & Enthusiasts sector, provide an update on your business, or learn about Capstone's wide range of advisory services and Outdoor Recreation market knowledge, please contact us.

Andrew Woolston, Associate, was the lead Market Intelligence contributor to this article.

Endnotes

1. Bureau of Economic Analysis, “Table 2.4.5. Personal Consumption Expenditures by Type of Product,” https://apps.bea.gov/iTable/?reqid=19&step=2&isuri=1&categories=survey&_gl=1*bzuq5h*_ga*MTE1NTQ4NTU3NC4xNzE2MzA0ODk4*_ga_J4698JNNFT*MTc0MDUxNjA1Mi41My4xLjE3NDA1MTYwNzguMzQuMC4w#eyJhcHBpZCI6MTksInN0ZXBzIjpbMSwyLDNdLCJkYXRhIjpbWyJjYXRlZ29yaWVzIiwiU3VydmV5Il0sWyJOSVBBX1RhYmxlX0xpc3QiLCI3MCJdXX0=, accessed February 25, 2025.

2. Googe Trends, “Google Trends,” https://trends.google.com/trends/, accessed February 25, 2025.

3. Johnson Outdoors, “Q1 2025 Johnson Outdoors Inc. Earnings Conference Call,” https://edge.media-server.com/mmc/p/nharktkg/, accessed February 25, 2025.

4. Topgolf Callaway Brands, “Q3 2024 Topgolf Callaway Brands Earnings Conference Call,” https://edge.media-server.com/mmc/p/mfx2mb6d/, accessed February 25, 2025.

5. Kontoor Brands, “Kontoor Brands Announces Definitive Agreement to Acquire Iconic Global Outdoor and Workwear brand Helly Hansen,” https://www.kontoorbrands.com/news-media/press-release/193/kontoor-brands-announces-definitive-agreement-to-acquire, accessed February 25, 2025.

6. Kontoor Brands, “Kontoor Brands Reports Preliminary 2024 Fourth Quarter Results,” https://www.kontoorbrands.com/investors/news-events/press-releases/detail/192/kontoor-brands-reports-preliminary-2024-fourth-quarter, accessed February 25, 2025.

7. Ski Racing, “SYNC Performance Expands its Portfolio with RACEtech Acquisition for Alpine Skii Safety Gear,” https://skiracing.com/sync-performance-expands-its-portfolio-with-racetech-acquisition-for-alpine-ski-safety-gear/, accessed February 25, 2025.

8. Thule Group, “Thule Group Acquires Quad Lock, the Global Market Leader in Performance Phone Mounts,” https://www.thulegroup.com/en/press/thule-group-acquires-quad-lock-global-market-leader-performance-phone-mounts-2278793, accessed February 25, 2025.

9. Thule Group, “Thule 2024 Q4 Investor Presentation,” https://www.thulegroup.com/sites/thulegroup/files/pr/Thule%202024%20Q4%20investor%20presentation_0.pdf, accessed February 25, 2025.