Sales at Amer Sports flagship Winter & Outdoor business grew 14 percent in currency-neutral terms in the first quarter thanks to double-digit growth in five of its six segments.
By comparison, the Finnish company reported that currency-neutral (c-n) sales declined 5.0 percent at both its U.S.-heavy Ball Sports/Wilson business and its Fitness/Precor business.
Sales at its Winter & Outdoor (W&O) segment reached €341.9 million ($386 mm) in the first quarter ended March 31, up 18.9 percent in reported terms. Apparel and Footwear sales which include sales of Arc’teyrx, Salomon and Atomic – accounted for nearly three quarters of the incremental revenue. Winter Sports, which owns the Atomic and Salomon ski equipment brands, contributed nearly 15 percent of incremental revenue. Sports Instruments, which sells smartwatches and other devices under the Suunto brand, accounted for about 8 percent.
W&O sales reached €77.6 million in the Americas, up 22.0 percent c-n from the first quarter of 2013. By comparison, currency-neutral sales grew 12.0 percent in EMEA and 10.0 percent the Asia-Pacific.
Direct-to-consumers sales through company owned stores and e-commerce grew 39 percent compared with a year ago.
EBIT at W&O more than doubled to €21.4 million, accounting for 63.7 percent of the company’s total and came almost entirely from the growth of higher margin footwear and apparel sales.
Ball Sports nearly matches W&O EBIT
At Ball Sports, which completed its acquisition of Louisville Slugger last week, Amer Sports President and CEO Heikki Takala said the recovery continues. While sales declined in currency-neutral terms, the business posted EBIT of €18.3 million ($21mm), up 38.6 percent from a year earlier and nearly as much as the W&O segment, which is more than twice as large.
“Whilst total sales declined behind our new distribution strategy, we delivered solid growth across the focus growth areas, especially performance tennis and baseball, and we continued to improve gross margins and EBIT toward our mid-term targets,” said Takala. “To accelerate profitable growth in baseball and softball, we announced the acquisition of Louisville Slugger, which makes us the global leader in baseball and softball equipment. The acquisition supports our strategic glide path and confirms that we have progressed to a level where we can accelerate beyond organic growth, and we have the balance sheet strength to do so.”
Shift to in-house distribution stifles Precor's US sales
Organic sales also declined at Fitness/Precor, contributing to a sharp drop in EBIT that also reflected a move to in-house distribution in the United States that required de-stocking the current dealer inventories. Takala said the process continues, but that the biggest financial impact is in the rear view mirror.
Earnings surge on higher footwear and apparel sales
Amer Sports reported consolidated gross margin increased 160 basis points to 45.9 percent thanks to growing contributions for apparel and footwear. Earnings before income taxes – excluding non-recurring items- spiked 68 percent to €33.6 million, or €0.16 per share compared with €0.07 in the same quarter a year ago. Net cash flow after investing activities dipped 2.7 percent to €43.0 million.
Amer Sports left its full-year guidance unchanged. That outlook calls for net sales in local currencies to increase and EBIT margin – excluding non-recurring items – to improve from 2014.
Takala warned investors, however, not to expect Amer Sports W&O business to sustain the growth rates seen in the first quarter.
“We know already that the impact of the relatively late winter will come into pre-orders and we are not expecting, basically, growth there at all,” Takala said. “Even on Apparel and on Footwear, you know, we are likely to stay on a good double-digit growth but not these levels. So, there is of course — there is good momentum but maybe not quite sustainable at this level.”
