Amer Sports relied on Electronics to pull through the 
second quarter, but softness in Winter Sports equipment as well in Golf and Team Sports more than offset those gains. Overall sales declined in the mid-singles, but the implementation of expense controls that the company has been working on look to be beginning to pay off as the quarterly loss slimmed by the same rate.
In the hopes of increasing synergies between its multiple business segments, Amer re-organized its company with the four business areas of Winter & Outdoor, Ball Sports, Fitness and Instruments maintaining their categories, but with group level functions, namely finance, administration and communications; supply chain management and information technology; and sales and channel management, forming the three respective groups in the back-end.
The heavy losses seen in Amers winter sports brands for Q1 slowed during the second quarter, though sales were still below the year-ago quarters levels. Amer now expects winter sports equipment sales to be down “in excess of 20%” for the 2007/08 winter season, lowered from previous expectations of sales down 15% to 20%. Pre-orders for the 2007/08 season were described as “clearly weaker than expected.” Despite the dim outlook, the company feels it can gain market share in ski boots and in Cross Country equipment. Share levels in alpine skis and bindings are expected to be flat to last year.
Salomon sales were down 4.5% during the second quarter and down 3% in local currencies. In spite of the decline in sales, the divisions EBIT loss was basically flat, expanding slightly to a loss of 22.6 million ($29.6 mm) compared to a loss of 22.4 million ($26.9 mm) in Q1 last year.
Winter sports equipment sales were down 26.8% to 10.1 million ($13.6 mm) for the quarter, but this was partially offset by a 20.9% increase in apparel and footwear to 36.4 million ($49.1 mm) driven by trail running footwear and Salomons spring apparel collection. Arcteryx was said to have seen “a double-digit growth” in the apparel category. Mavic also contributed with a 7.0% increase in sales to 26.0 million ($35.1 mm).
Atomic Q2 sales were down 14.3% in Euros and down 11% in local currencies. The divisions EBIT narrowed 9.0% to a loss of 11.1 million ($15.0 mm) compared to a loss of 12.2 million ($15.3 mm) last year. In local currencies, the divisions EBIT loss slimmed by 8%.
Wilson first quarter net sales decreased 6% in Euros, but only slipped 1% on a currency-neutral basis and actually increased 1.2% to $203 million in U.S. dollars, where the vast majority of Wilsons sales are currently produced. In U.S. dollars, Wilsons racquet sales increased 10.3% to $95.9 million compared to $86.9 million last year. The company said it had five of nine most-sold racquets in the U.S. by specialty retailers, with four out of the top ten in Japan.
Golf sales fell 6.5% to $45.6 million with the company posting its first “positive gains in Europe in golf,” but Japan left the company “a little disappointed.” Despite the decline in the quarter in which “about half of the golf business is done,” management said the segment “went pretty much according to plan.”
Team sports sales declined 5.2% to $61.3 million in U.S. Dollars on delivery timing issues, expecting to recoup what was lost in the first half during the back half. In Euros, Wilsons EBIT for the quarter fell 12.8% to 15.0 million compared to 17.2 million.
In U.S. Dollars, the same metric was down 6.4% to $20.2 million. The decline in profitability was mainly due to the change in timing of deliveries of team sports equipment, but also because of the implementation of SAP and some additional marketing costs.
Precor sales inched up 1% when measured in Euros, but increased 7% on a currency-neutral basis with North American sales fueling growth in both the commercial and the consumer segments. The divisions EBIT jumped 51% during the quarter to 6.2 million ($8.4 mm). Without the effects of foreign exchange rates, Precors EBIT increased 61% over the year-ago period.
Suunto was Amers fastest growing division with overall sales growing 6.7% in Euros and 9% on a currency-neutral basis. Sales of wristtop computers increased 29%. Diving instrument sales were “down a little bit” during the quarter, according to Talermo, and down 4% for the first half, improving slightly during the quarter from being down 5% at the end of Q1. Combined sales of wristtop computers and diving instruments accounted for 69% of Suuntos net sales in the second quarter. EBIT decreased 62.2% to 1.4 million ($1.9 mm) from 3.7 million ($4.6 mm) last year. In currency-neutral terms, EBIT was off by 61% for Suunto.
Amer lowered its guidance for the year shortly before releasing its second quarter results. The company now expects EBIT for fiscal 2007 to be down compared to 2006 on negative winter sports equipment EBIT. The company had previously lowered its guidance to flat EBIT on increased sales at the end of Q1 from the original guidance of flat sales and an improved EBIT. All business segments other than winter sports equipment are expected to “develop positively.”
