Amer Sports, Inc. (Group), the parent of Arc’teryx, Salomon, and Wilson Sports, among others, is reporting that the third quarter was “very strong” for the Group across all brands and geographies, led once again by Performance at Arc’teryx.

“Led by Arc’teryx, our unique portfolio of premium technical brands continues to create white space and take market share in sports and outdoor markets around the world,“ company CEO James Zheng offered. “We are executing against our largest growth opportunities in Arc’teryx and Salomon footwear, while our market-leading Ball & Racquet franchise experienced a growth acceleration.”

Third-quarter consolidated revenue increased to $1.35 billion, representing 17 percent growth year-over-year (y/y) on both a reported and constant-currency (cc) basis.

Channel Summary
Amer reported that its growth continues to be led by the direct-to-consumer, or DTC business.

  • DTC business grew 41 percent y/y, led by Arc’teryx and Salomon footwear.
  • Wholesale trends improved in the quarter, growing 8 percent y/y, led by Arc’teryx and Wilson.

Segment Summary

  • Technical Apparel, which primarily includes the Arc’teryx brand business, increased 34 percent (+33 percent cc) year-over-year to $520 million in Q3. Omni-comp growth, which reflects year-over-year revenue growth from owned retail stores and e-commerce sites that have been open for at least 13 months, was 20 percent for the third quarter, a sequential decline from the 33 percent growth seen in the second quarter.
    • Third quarter Adjusted operating margin increased 370 basis points y/y to 20.0 percent.
    • For more insight into the Arc’teryx business, see additional SGB Media coverage at bottom or go here.
  • Outdoor Performance, primarily comprised of Salomon brand sales, increased 8 percent (+7 percent cc) year-over-year to $534 million for the third quarter. Sequentially, the increase fell short of the double-digit growth reported in the second quarter.
    • Adjusted operating margin decreased 40 basis points y/y to 17.5 percent of sales for the third quarter.
    • For more insight into the Salomon business, see additional SGB Media coverage at bottom or go here.
  • Ball & Racquet Sports, primarily comprised of the Wilson Sports business, increased 11 percent y/y to $300 million in the third quarter. The growth trend represents a significant sequential increase from Q2 when sales were up only 1 percent in reported terms and 2 percent in constant-currency terms. Adjusted operating margin increased 600 basis points y/y to 6.9 percent of sales for the quarter.

Regional Summary
Regional growth was reportedly led by Greater China, which increased 56 percent in the third quarter, followed by Asia Pacific which grew 47 percent. Growth in Americas and EMEA accelerated from 1 percent growth for each segment in Q2 to 7 percent and 4 percent, respectively, in the third quarter, but still lagged the Asia regions by a wide range.

China Summary
Amer Sports, which is majority owned by its China retail partner, highlighted on its conference call with analysts that while other consumer companies faced challenges in Greater China in Q3, Amer generated 56 percent growth in the region, continuing to “well outperform the market.”

“We are seeing strong momentum across all of our three big brands, including strong consumer confidence following the government stimulus actions,” Zheng noted.

The CEO highlighted some of the key reasons behind the company’s standout performance in Greater China.

“Number one, our brands compete in one of the healthiest and the fastest growing consumer segments in China, the premium sports and outdoor market. The outdoor trend in China continues to be very strong, attracting younger consumers, female consumers, and even luxury shoppers,” Zheng explained.

“Additionally, the China consumer landscape today has evolved into a market of winners and losers, with some brands doing extremely well and others underperforming. Our three small specialized brands are known for their innovative properties, high quality and technical innovation which resonate with Chinese shoppers.”

Lastly, Zheng said the most important advantage is the company’s great team in China. “Our deep expertise and unique scalable operating platform gives us a significant competitive advantage across the portfolio,” he said.

Asked by an analyst about the health of the Chinese consumer, Zheng said that the consumer in the China markets today are still looking for newness, especially in Amer’s segments. “We are pretty lucky the sports segment is still booming in the China market,” he remarked.

“We estimate there’s a high-single digit growth in our sports industry this year in China, and especially outdoor segments grow more than the industry average,” Zheng continued. “We can tell more and more consumers, especially in Tier 1 and Tier 2 cities, they are looking for-they are really treating outdoor activities as a part of the lifestyle-so the participation level is getting higher than our expectations. It’s a very good moment for us, especially Arc’teryx and Salomon and certain other segments. We can have a clear benefit from the overall market dynamics.”

Company CFO Andrew Page also provided an update on the company’s regional sourcing exposure, given the increased market focus on potential U.S. import tariffs.

“Greater China represents less than 30 percent of Amer Sports’ global sourcing, and looking at Amer Sports Group in totality, sourcing from China to the U.S. market represents only 10 percent to 12 percent of total Group revenues,” Page noted. “Similar to the last period of rising China tariffs, our Ball & Racquet segment would be most impacted, predominantly [with] tennis racquets, baseball bats, and basketballs.

Page said they have some degree of flexibility to adjust the supply chain, but price increases will be the primary tool they utilize should tariffs occur.

Income Statement Summary

  • Gross margin increased 420 basis points y/y to 55.2 percent of sales in the third quarter; Adjusted gross margin increased 410 basis points y/y to 55.5 percent of sales, primarily driven by positive segment, product, regional and channel mix shift, combined with lower discounting actions. Going forward, Amer expects its highest gross margin franchise, Arc’teryx to continue to grow significantly faster than the rest of the portfolio and continue to be the biggest underlying driver of its ongoing gross margin expansion.
  • Selling, general and administrative (SG&A) expenses increased 20 percent y/y to $586 million in Q3; Adjusted SG&A expenses increased 23 percent y/y to $572 million for the period. Adjusted SG&A expenses as a percentage of revenues increased 210 basis points and represented 42.3 percent of revenues in Q3, mainly driven by SG&A de-leverage at the Outdoor Performance segment due to Greater China and Asia Pacific growth plan investments. Technical Apparel also slightly de-levered due to investments in opening stores.
  • Operating profit increased 69 percent y/y to $177 million in the third quarter; Adjusted operating profit increased 46 percent y/y to $195 million, including a $14 million government subsidy received in the third quarter that had been expected to occur in the fourth quarter.
  • Consolidated operating margin increased 400 basis points y/y to 13.1 percent of sales. Adjusted operating margin increased 280 basis points y/y to 14.4 percent of sales, which came in above guidance of approximately 11 percent to 12 percent.
  • Adjusted corporate expenses were $26 million versus $23 million in Q3 of last year, driven by higher personnel costs.
  • Depreciation and amortization was $71 million, which includes $32 million of ROU depreciation. Adjusted net finance cost in the quarter was $45 million, at the low end of the $45 million to $50 million range Amer guided to on its last call. In the quarter, the adjusted income tax expense was $78 million, which equates to an adjusted effective tax rate of 52 percent, in line with guidance of 50 percent to 55 percent.
  • Net income increased 257 percent to $56 million, or 11 cents per diluted earnings per share; Adjusted net income increased 651 percent to $71 million, or 14 cents diluted earnings per share, compared to an Adjusted net loss of $13 million, or 3 cents per share, in the prior-year period.

Balance Sheet Summary
Amer Sports ended the quarter with $2 billion of net debt, up from Q2 as the company typically draws on its revolver in the third quarter to fund inventory build ahead of its key winter season.

“Using the midpoint of our 2024 implied adjusted operating profit guidance, our net debt to adjusted non-IFRS EBITDA ratio was approximately 2.8 times at the end of Q3,” offered Page. “Deleverage on our balance sheet remains a priority and our goal is to reduce our leverage ratio to 1.5 times or better over the next few years through both EBITDA expansion and debt pay down.”

Page said the company’s focus on inventory discipline was paying off as inventories finished Q3 up only 12 percent year-over-year versus 17 percent sales growth for the period.

  • Cash and equivalents totaled $312 million at quarter end.
  • Net debt at quarter-end was $1.99 billion at quarter-end.

Leadership Transition
The company announced that Guillaume Meyzenq, Salomon’s chief product officer, was appointed president and CEO of Salomon, effective January 1, 2025. Michael Hauge Sørensen, Amer Sports’s chief operating officer, has reportedly decided to step down and return to his former role as advisor to Amer’s Board of Directors.

Outlook
“Another quarter of high-teens organic growth accompanied by healthy gross- and operating-margin expansion reflects the combination of great brands and strong execution by our teams around the world. Very strong growth from our highest-margin Arc’teryx franchise combined with improving trends in both Ball & Racquet and Winter Sports Equipment give us the confidence to raise our full-year sales and earnings guidance,“ offered CFO Andrew Page. “As we begin to look beyond this year, we are also confident in our initial 2025 outlook and expect to deliver results consistent with our long-term financial algorithm of low-double-digit to mid-teens annual revenue growth and 30-70+ bps of annual adjusted operating margin expansion driven by gross margin expansion.”

Full Year 2024
Amer Sports is updating guidance for the year ending December 31, 2024. All guidance figures reference adjusted amounts.

  • Reported revenue growth: 16 percent to 17 percent
  • Gross margin: 55.3 percent to 55.5 percent.
  • Operating margin: towards the high-end of 10.5 percent to 11.0 percent.
  • D&A: approximately $270 million, including roughly $120 million of ROU depreciation.
  • Net finance cost: $200 million to $210 million, including approximately $15 million of finance costs in the first quarter 2024 that will not be recurring.
  • Effective tax rate: approximately 37 percent.
  • Fully diluted share count: approximately 500 million.
  • Fully diluted EPS: 43 cents to 45 cents per share.

Technical Apparel
Revenue growth of approximately 34 percent and segment operating margin slightly above 20 percent.

Outdoor Performance
Revenue growth of approximately 8 percent and segment operating margin high-single-digit percent.

Ball & Racquet
Revenue growth of approximately 4 percent and segment operating margin low- to mid-single-digit percent.

2025 Guidance
Amer Sports said it will provide full-year 2025 guidance during its earnings call for the year ended December 31, 2024.

Image courtesy Arc’teryx

See below for additional coverage of Q3 details from Arc’teryx, Salomon and Wilson

EXEC: Arc’teryx Outperforms Once Again in Q3 Despite Tough 2023 Comps

EXEC: Salomon Gets New CEO as Growth Moderates in Q3 on Weaker Equipment Business

EXEC: Wilson Sports Business Returns to Double-Digit Growth in Q3; Bolsters Owned Retail