Amer Sports, Inc. (NYSE:AS) Q1 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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%.
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 operational performance.
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 soft goods, racquet sports, and golf.
Net Debt $515 million, down from $591 million at the end of Q4, indicating improved balance sheet health.
Operating Cash Flow Generated $164 million in Q1 2025, reflecting strong profit growth and disciplined working capital management.
Adjusted Corporate Expenses $19 million, up from $17 million in Q1 of last year.
Depreciation and Amortization $78 million, including $36 million of ROU depreciation.
Adjusted Finance Cost $17 million, comprising $22 million of interest expense, partially offset by $5 million of FX gains.
Effective Tax Rate 30%, better than expected due to over delivery of operating income.
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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 Presentation: Veilance will present at Fashion Week in Paris, receiving positive feedback from buyers and media.
Salomon Footwear Launch: Salomon launched the XT-WHISPER, a global footwear offering, which was well-received.
Aero Glide 3 Launch: The Aero Glide 3 running shoe was launched, noted for its innovative optiFOAM EVO material.
Market Expansion in China: Amer Sports plans to open approximately 25 net new Arc’teryx stores globally, focusing on high-quality locations.
Salomon Shop Expansion: Salomon opened 22 net new shops in China, aiming for near 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 is expanding its presence in the U.S. with plans for 3-4 new shops in New York and growth in key wholesale accounts.
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 well-positioned to manage tariff impacts due to low U.S. revenue exposure and strong pricing power.
Store Optimization Strategy: Arc’teryx is focusing on optimizing its retail footprint rather than aggressive new store expansion.
Long-term Growth Strategy: 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, but acknowledges potential challenges.
Competitive Pressures: The company recognizes competitive pressures in the premium sports and outdoor market, particularly in the context of growing brands and market share in the sneaker segment.
Supply Chain Challenges: Amer Sports is navigating supply chain challenges, particularly related to sourcing from China and other regions, which could be impacted by tariffs and global economic conditions.
Economic Factors: The company is operating in a macroeconomic environment characterized by uncertainty, which could affect consumer spending and overall business performance.
Long-term Growth Risks: While Amer Sports is optimistic about growth, it cautions that double-digit growth in certain segments may not be sustainable long-term, particularly in Ball & Racquet.
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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 and optimizing the retail footprint.
Product Launches: Arc’teryx footwear is structured as a separate business unit with a dedicated P&L, with exciting launches planned for the second half of 2025.
Community Engagement: Arc’teryx hosted its first Academy event in California, achieving significant media impressions and direct sales lift.
Tariff Mitigation Strategies: Amer Sports is confident in managing tariff impacts through pricing power, vendor renegotiations, and supply chain maneuvers.
Growth in Great China: Amer Sports is focused on optimizing its retail footprint in Great China, with plans to grow revenue strong double-digits.
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 the previous guidance of $0.64 to $0.69.
CapEx Guidance: 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 earnings 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 distinguished brands that cater to different levels of sports participants. This unique proposition gives us a strong competitive edge, especially in the premium outdoor segment, where we see strong demand, particularly in Asia and China.
Q:Could you elaborate on momentum at Salomon and the white space you see to scale this brand?
A:Salomon's soft goods business is growing, especially in footwear with the introduction of modern outdoor sneakers, attracting new consumer groups, particularly younger females. We see a strong runway for growth in this category.
Q:Any change as we think about the omni-comp strength into the second quarter relative to high teens you saw in the first quarter?
A:The omni-comp was solid at plus 19%, driven by traffic increases and strong conversion. Outlet sales were lower, which we view positively as it reflects a stronger full-price business.
Q:Are there any technical reasons that attributed to the outsized growth in 1Q, or do you believe that the momentum observed in the quarter is sustainable?
A:We raised our guidance for Salomon Outdoor Performance, indicating our confidence in sustainability. The brand is driving momentum in Asia and Europe, and we are starting to penetrate key accounts in North America.
Q:With winter goods growing low single digits for this year, does it imply that soft goods can grow 20% this year?
A:We have not given specific long-term growth targets, but we believe we have the product to disrupt the market and take meaningful share.
Q:What pushes margin back to the mid-single-digit levels or beyond that you’ve seen in previous years?
A:We believe scaling our investment in the Tennis 360 concept will drive profitability in Ball & Racquet.
Q:Can you just talk about the strategy around closing some Arc’teryx partner stores in China to open larger format?
A:This strategy aims to elevate execution in China by moving to better locations that represent the premium nature of the brand, expanding square footage and improving productivity.
Q:What kind of potential do you see long term for the women’s business in Arc’teryx?
A:We see strong growth potential in the women’s business, with significant traction from improved color, fit, and choice. We expect to see a more balanced business between men’s and women’s.
Q:Can you talk about your AURs in the Salomon footwear business and where within that assortment you’re seeing the greatest strength and growth?
A:Both performance and sports style categories are strong, with sports style being the biggest growth driver. The GRVL franchise has also seen very successful launches.
Q:Did you see any air pockets over the last several months in any of your businesses just tied to the whole tariff news?
A:We have not seen any air pockets; we continue to see broad-based strength across the portfolio.
Q:Review of Unclear Management Responses
A:Management appeared to avoid giving a direct answer regarding specific long-term growth targets for Salomon sneakers and the exact details on the moving pieces affecting gross margin, particularly in relation to tariffs.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Aero Glide
Ball Racquet
Equipment brand
Great China
PL
Peninsula
ReBIRD
Salomon shop
Salomon sneaker
Sports Equipment
Technical Apparel
Wilson Tennis
Winter Sports
XT WHISPER
addition
attribute
brand luxury
city
consumer channel
format quality
legacy
market Salomon
medium
momentum Salomon
mountain town
opening closure
partner store
quality location
sneaker market
sport style
start
store expansion
strategy
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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