Amer Sports, Inc. (AS) Q1 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals strong financial performance with a 23% sales growth and improved margins, alongside optimistic guidance for Salomon's growth. Despite supply chain concerns, the company has mitigated tariff impacts. The Q&A session highlights strong brand momentum and market opportunities, especially in the women's segment and Asia. However, the lack of a share repurchase program and unclear guidance on long-term growth targets slightly temper the outlook. Overall, the positive financial results and strategic growth initiatives suggest a stock price increase in the short term.
Key Financial Performance
Sales Growth 23% growth (26% ex currency) year-over-year, driven by strong performance in Technical Apparel and Outdoor Performance.
Adjusted Operating Margin Increased by 490 basis points to 15.8% year-over-year, due to gross margin expansion and SG&A leverage.
Adjusted Gross Margin Increased by 330 basis points to 58% year-over-year, primarily driven by favorable channel, geographic and product mix as well as lower discounts.
Adjusted Net Income $148 million compared to $50 million in the prior year, reflecting strong sales growth and improved margins.
Adjusted Diluted EPS $0.27 compared to $0.11 last year, driven by increased net income.
Technical Apparel Revenue Increased 28% to $664 million, led by Arc'teryx, with DTC growth of 31%.
Outdoor Performance Revenue Increased 25% to $502 million, driven by strong performance in Salomon soft goods and Winter Sports Equipment.
Ball & Racquet Revenue Increased 12% to $306 million, driven by growth in soft goods, racquet sports, and golf.
Adjusted Corporate Expenses $19 million, up from $17 million in Q1 of last year.
Net Debt $515 million, down from $591 million at the end of Q4.
Operating Cash Flow Generated $164 million in Q1 2025, reflecting strong profit growth and disciplined working capital management.
Inventory Position Up 15% year-over-year, well below the 23% sales growth.
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Operating Highlights
New Product Launches: Arc'teryx launched the Norvan LD 4 and Vertex Speed footwear, with plans for more shoe launches in the second half of 2025.
Footwear Growth: Footwear is Arc'teryx's fastest-growing category, with a dedicated business unit established for better focus.
Women's Product Growth: The Clarkia pants for women saw explosive growth, indicating rising brand awareness and affinity.
Veilance Expansion: Veilance now has its own P&L and management team, focusing on product development and marketing.
Salomon Footwear Launch: Salomon launched the XT-WHISPER, a global footwear product that received positive customer feedback.
Market Expansion in China: Arc'teryx plans to optimize its retail footprint in China, focusing on larger, high-quality store openings.
Salomon Store Expansion: Salomon opened 22 net new shops in China, aiming for nearly 300 locations by year-end.
Wilson Tennis 360 Expansion: Wilson plans to open approximately 50 more Tennis 360 shops in China this year.
U.S. Market Growth: Salomon's first U.S. store in NYC shows strong traction, with plans for more locations in key markets.
Sales Growth: Amer Sports achieved 23% sales growth in Q1 2025, with a 490 basis point increase in adjusted operating margin.
Direct-to-Consumer Growth: DTC sales grew 39%, driven by Salomon footwear in Greater China and APAC.
Inventory Management: Inventory increased by 15% year-over-year, below the 23% sales growth, indicating effective management.
Tariff Management Strategy: Amer Sports is confident in managing tariff impacts due to low U.S. revenue exposure and strong pricing power.
Store Optimization Strategy: Arc'teryx is focusing on optimizing store quality over rapid expansion, with plans for 25 net new stores globally.
Long-term Growth Focus: Amer Sports aims for sustainable growth through premium brand positioning and technical innovation.
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Risk or Challenges
Tariff Exposure: Amer Sports is facing macro uncertainty related to U.S. tariffs, with 26% of revenues exposed to the U.S. market. The company has implemented mitigation strategies to manage tariff impacts, which are expected to be negligible this year.
Competitive Pressures: The company acknowledges competitive pressures in the global sneaker market, particularly for Salomon sneakers, which have a small market share relative to the $180 billion global sneaker market.
Supply Chain Challenges: Amer Sports is navigating supply chain challenges, particularly in relation to sourcing from China, which represents a significant portion of their tariff exposure.
Economic Factors: The company is operating in a macroeconomic environment characterized by uncertainty, which could impact future performance and growth.
Market Penetration: Despite strong growth, Amer Sports brands, particularly Arc'teryx and Salomon, are still underpenetrated in global markets, indicating potential risks in achieving expected growth targets.
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Guidance & Outlook
Store Expansion Strategy: Amer Sports plans to open approximately 25 net new Arc'teryx stores globally in 2025, focusing on high-quality locations rather than rapid expansion.
Tariff Mitigation Strategies: The company is confident in managing tariff impacts through pricing power, vendor renegotiations, and supply chain maneuvers.
Product Launches: Arc'teryx has an exciting pipeline for shoe launches in the second half of 2025, and Salomon sneakers are expected to grow strong double digits annually.
Community Engagement: Arc'teryx Academy event in California achieved record-breaking sales and media impressions, enhancing brand awareness.
Direct-to-Consumer Growth: DTC channel grew 39% in Q1, driven by Salomon footwear in Greater China and APAC.
Revenue Growth Guidance: For 2025, Amer Sports raised its revenue growth expectations from 13%-15% to 15%-17%.
Adjusted EPS Guidance: Adjusted diluted EPS is now expected to be between $0.67 and $0.72, up from $0.64 to $0.69.
CapEx Expectations: CapEx is expected to be approximately $300 million, primarily for new store expansion and logistics investments.
Gross Margin Expectations: Adjusted gross margin expectations are maintained at 56.5% to 57% for the full year.
Operating Margin Guidance: Adjusted operating margin guidance remains at 11.5% to 12% for the full year.
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Shareholder Return Plan
Share Repurchase Program: Amer Sports has not announced any share repurchase program during the call.
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Key Q&A
Q:Could you walk through operating from a portfolio approach in this backdrop and just what that provides?
A:Amer Sports is a unique portfolio company with a distinguished proposition in the market, offering a strong technical product pipeline that addresses different levels of sports participants' needs, giving us a competitive edge.
Q:Could you elaborate on momentum at Salomon and the white space you see to scale this brand?
A:Salomon's soft goods business, especially footwear, is growing, with a new category called modern outdoor sneakers attracting younger female consumers. We see a strong runway for this brand.
Q:Any change in omni-comp strength for Arc'teryx into the second quarter?
A:Arc'teryx had a solid omni-comp of +19%, driven by traffic increases and strong conversion, with positive signals from the market.
Q:Are there any technical reasons for the outsized growth in 1Q for Salomon, and is this momentum sustainable?
A:We raised our guidance for Salomon Outdoor Performance, indicating confidence in sustainability, with strong growth in Asia and Europe.
Q:With winter goods growing low single digits, does that imply soft goods can grow 20% this year?
A:We haven't given specific long-term growth targets, but we see strong margin accretion as soft goods grow.
Q:What pushes Ball & Racquet margin back to mid-single-digit levels?
A:Continuing to scale our investment in the Tennis 360 concept will drive profitability.
Q:Can you elaborate on the opportunity in the women's business?
A:The women's business is underpenetrated, with strong growth potential as we improve color, fit, and choice, seeing 38% growth in the first quarter.
Q:What portion of Ball & Racquet store openings were in China?
A:Most of the store growth is in Asia and Greater China, where the mono-brand retail format works well.
Q:What are the moving pieces regarding gross margin and tariffs?
A:The 30% tariff on China and 10% Rest of the World remain in place, but the impact on our P&L is negligible due to mitigation initiatives.
Q:What is the visibility you see in Salomon's wholesale business?
A:The Salomon wholesale business is gaining momentum, especially in Europe, with strong sell-through and reorder acceleration.
Q:Where within the Salomon footwear assortment are you seeing the greatest strength and growth?
A:Sports style is the biggest growth driver, with successful launches in both performance and sports style categories.
Q:Did you see any air pockets in your businesses tied to tariff news?
A:We haven't seen any air pockets; broad-based strength continues across the portfolio.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer regarding specific long-term growth targets for Salomon sneakers and the exact impact of tariffs on gross margin.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Aero Glide
Arcteryx store
Ball Racquet
Capital Markets
Equipment brand
Great China
Markets Investor
PL
Peninsula
ReBIRD
SVP Capital
Salomon shop
Salomon sneaker
Sports Equipment
Technical Apparel
Wilson Tennis
Winter Sports
XT WHISPER
addition
brand luxury
closure
format quality
legacy
location Arcteryx
market Salomon
medium
mountain town
sneaker market
sport style
start
store expansion
tariff
terrain
woman
AS Transcript
Amer Sports, Inc. (AS) Q3 2025 Earnings Call Transcript
Positive11-18
The earnings call summary and Q&A indicate strong revenue growth, improved margin guidance, and optimistic expansion plans, especially in China and North America. Although management was vague about specific store growth numbers, the overall sentiment is positive with raised guidance across multiple metrics, strong regional performance, and strategic investments in growth areas like footwear and new stores. These factors suggest a likely positive stock price movement.
Amer Sports, Inc. (AS) Q2 2025 Earnings Call Transcript
Positive8-19
The earnings call reveals strong financial performance with significant growth in key areas such as DTC and regional sales, particularly in Asia Pacific. The raised revenue and EPS guidance, coupled with a 250 basis point increase in gross margin, reflect optimism. The Q&A section supports this with positive momentum in Salomon and Arc'teryx, robust inventory, and strategic growth plans. Despite some vague responses on margins, the overall sentiment is bolstered by strong earnings, optimistic guidance, and effective market strategies, suggesting a strong positive stock price reaction.
Amer Sports, Inc. (NYSE:AS) Q1 2025 Earnings Call Transcript
Positive5-21
The earnings call highlights strong financial performance, with significant increases in revenue, operating margin, and net income. The Q&A session reveals confidence in sustainable growth, particularly in Salomon's expansion and the premium outdoor segment. The raised guidance for Salomon and strategic moves in China further support a positive outlook. While management avoided specifics on long-term targets, the overall sentiment remains optimistic, with no major concerns raised. The market is likely to respond positively, with potential stock price increase in the range of 2% to 8%.
Amer Sports, Inc. (AS) Q1 2025 Earnings Call Transcript
Positive5-20
The earnings call reveals strong financial performance with a 23% sales growth and improved margins, alongside optimistic guidance for Salomon's growth. Despite supply chain concerns, the company has mitigated tariff impacts. The Q&A session highlights strong brand momentum and market opportunities, especially in the women's segment and Asia. However, the lack of a share repurchase program and unclear guidance on long-term growth targets slightly temper the outlook. Overall, the positive financial results and strategic growth initiatives suggest a stock price increase in the short term.
AS Report
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