Amer Sports, Inc. raised its guidance. for 2024 after posting Q2 sales and earnings results that beat its expectations.
The freshly public Finnish company, which owns the Salomon, Arc’Teryx, Wilson, Peak Performance and Atomic brands, reported a 16 percent increase in sales in Q2 to $994 million. Net loss decreased 98 percent to $4 million, or 1 cent diluted loss per share. Adjusted net income increased 129 percent to $25 million, or 5 cents diluted earnings per share. Gross margin increased 220 basis points to 55.5 percent.
Amer was looking for a 10 percent growth in revenues and for a gross margin of 54 percent. Diluted EPS was expected to be between a loss of 4 cents per share and a loss of 8 cents per share.
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Amer Sports chief executive officer James Zheng said that the company’s strong results, led by its Arc’teryx brand, have positioned it for a strong 2024.
By brand segment, revenues for technical apparel, which includes Arc’teryx and Peak Performance, were up 34 percent year-over-year to $407 million. The outdoor performance segment, which includes the company’s Salomon brand, saw revenues grow 11 percent to $304 million. The Ball & Racquet category, which includes the Wilson brand, grew 1 percent to $283 million.
Within Arc’teryx, footwear sales grew more than 100 percent year-over-year in Q2. Penetration of the footwear business also grew from six to 10 percent and the brand plans to reach 20 percent penetration over the next few years. The brand’s best selling trail running shoe, the Norvan LD 3, is still the brand’s top shoe model, though newer models like the Kragg have been recent hits as well.
“We see footwear as probably the most substantial economic engines of growth inside the company,” Arc’teryx chief executive officer Stuart Haselden told FN in an interview. “And as we look into the future, the investments and the importance of footwear for our business is one of the most exciting parts of our innovation strategy.”
After Arc’teryx launched its first shoe line designed and created in-house in the spring, the brand plans to continue to evolve these styles and create new silhouettes in future quarters as well. Haselden said that footwear will help Arc’teryx become a more year-round brand, given that its apparel business is more heavily weighted to the fall and winter seasons.
“As a technical apparel company, we designed some of the most complex apparel products in the world,” Haselden said. “We feel like that technical excellence that we have translates really well to footwear, which is also an extremely technical product.”
Given the strong results, Amer Sports raised its outlook for 2024 and now expects revenues to grow between 15 and 17 percent for the year. Fully diluted EPS is expected in the range of 40 cents to 44 cents. Gross margin is projected to be 54.5 percent. Revenues for the technical apparel category are expected to grow more than 30 percent. Outdoor performance revenue is projected in the mid-to-high-single-digit range and ball and racquet revenues are projected in the low-to-mid single-digit range.
“Our strong financial performance in Q2 reinforces my confidence in our near- and long-term path forward,” Amer Sports chief financial officer Andrew Page said in a statement. “Organic revenue growth in the high-teens and significant gross- and operating-margin expansion reflects the combination of great brands, strong management execution, and a disciplined approach to expenses and working capital. These outstanding results give us the confidence to raise our full-year sales and earnings guidance.”
In the third quarter, Amer Sports projects revenue growth of between 12 and 13 percent, gross margin of 54 percent and fully diluted EPS of between 8 cents and 10 cents.
