21-05-2025
Amer Sports Inc (AS) Q1 2025 Earnings Call Highlights: Strong Sales Growth and Margin Expansion ...
Sales Growth: 23% reported growth, 26% ex-currency.
Adjusted Operating Margin: Expanded by nearly 500 basis points to 15.8%.
Adjusted Gross Margin: Increased 330 basis points to 58%.
Adjusted Net Income: $148 million, up from $50 million in the prior year period.
Adjusted Diluted EPS: $0.27 compared to $0.11 last year.
Technical Apparel Revenue: Increased 28% to $664 million.
Outdoor Performance Revenue: Increased 25% to $502 million.
Ball & Racquet Revenue: Increased 12% to $306 million.
Direct-to-Consumer Growth: 39% growth, led by Salomon footwear in Greater China and APAC.
Regional Growth: Asia Pacific up 49%, China up 43%, EMEA up 12%, Americas up 12%.
Net Debt: $515 million, down from $591 million at the end of Q4.
Operating Cash Flow: $164 million generated in Q1 2025.
Inventory Position: Up 15% year over year, below 23% sales growth.
Full Year Revenue Growth Guidance: Raised from 13%-15% to 15%-17%.
Adjusted Diluted EPS Guidance: Raised to $0.67 to $0.72 from $0.64 to $0.69.
Warning! GuruFocus has detected 6 Warning Sign with AS.
Release Date: May 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Amer Sports Inc (NYSE:AS) reported a strong start to 2025 with a 23% sales growth, or 26% excluding currency effects, and a significant expansion in adjusted operating margin by nearly 500 basis points.
The company's flagship brand, Arc'teryx, continues to show robust growth across all regions, channels, and categories, particularly in footwear and women's apparel.
Salomon sneakers are experiencing accelerating global momentum, with sales surpassing USD 1 billion in 2024, and the brand is gaining traction in both the US and Europe.
The Ball & Racquet segment saw a 12% growth, driven by strength in sportswear, racquet sports, and golf, with Wilson Tennis 360 continuing to resonate well with consumers.
Amer Sports Inc (NYSE:AS) has a strong presence in Greater China, with significant growth in the premium sports and outdoor market, supported by a scalable operating platform and a deep understanding of the local market.
Despite strong performance, there is macro uncertainty related to US tariffs, which could impact future financial results.
The Ball & Racquet segment, while showing growth, is expected to grow at a slower pace in the long term, with projections of low to mid-single digits.
The company is facing challenges in the Nordic or cross-country market, although they have managed to move a significant amount of inventory at reasonable discounts.
There is a potential impact from tariffs, with a 100-basis-point annualized drag if higher tariffs are reinstated, although mitigation strategies are in place.
The second half of the year is expected to show slower growth compared to the first half, reflecting a cautious approach due to ongoing macroeconomic uncertainties.
Q: Can you elaborate on the competitive advantages of Amer Sports' portfolio and the momentum at Salomon? A: Jie Zheng, CEO, explained that Amer Sports has a unique portfolio of premium brands with strong technical products, which gives them a competitive edge, especially in the outdoor segment. Salomon's growth is driven by its modern outdoor sneakers, attracting younger and female consumers globally.
Q: Is the momentum observed in Salomon's growth sustainable, and what margin profile can it achieve? A: Andrew Page, CFO, confirmed the sustainability of Salomon's growth, noting raised guidance for the year. The brand's strong product and operational strategies are driving momentum, particularly in Asia Pacific and Greater China, with potential for significant market share gains.
Q: What is the strategy behind closing some Arc'teryx partner stores in China to open larger formats? A: Stuart Haselden, CEO of Arc'teryx, explained that the strategy is to elevate brand execution by moving to better locations that represent the premium nature of the brand, expanding square footage, and converting from wholesale to owned locations for better financial outcomes.
Q: How is the women's business performing at Arc'teryx, and what potential do you see? A: Stuart Haselden highlighted strong growth in the women's segment, driven by improved color, fit, and product choice. The women's business grew 38% in Q1, with potential for balanced growth between men's and women's segments.
Q: How are tariffs impacting Amer Sports, and what mitigation strategies are in place? A: Andrew Page stated that the current tariffs have a negligible impact on the 2025 P&L due to mitigation strategies like pricing adjustments and vendor management. The company is confident in its ability to offset higher tariffs over time.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
