By Eric Smith
Double-digit improvement with the Arc’teryx brand and a 21 percent sales growth in China were the primary drivers behind Finland-based Amer Sports’ performance in the second quarter.
Amer also saw strength in the company’s own retail and e-commerce sales, helping the company’s sales increase 2 percent to €483 million in local currencies. The modest growth didn’t appear to concern company executives, who noted the typical slow growth for Amer in this quarter.
“Q2 is our smallest quarter, during which we prepare for the significantly bigger H2 and we spend Opex and build inventory against confirmed pre-orders and expected demand,” said Heikki Takala, president and CEO. “For H2 2018, our initiative pipeline is robust, and we expect strong growth in Arc`teryx, Winter Sports Equipment, Sports Instruments and Fitness, which is boosted by the largest ever customer deal we just won for two years.”
Brand Performance
Arc’teryx’ growth helped Amer Sports’ outdoor category grow 4 percent in local currencies. The premium brand saw strong demand during the previous fall/winter season, leaving inventory levels healthy, Takala said.
The brand is also helping drive the company’s winter sports equipment sales, which Takala said is “looking at approximately 10 percent preorder growth.”
But other brands fared well in the quarter, the company said. Suunto Sports Instruments grew, “as the building blocks are well laid out for the second half of the year,” Takala said.
And though Precor delivered a “flattish H1, we now start to get benefit from expansion into the fashion segment, and we just won the largest ever two-year customer contract in Precor’s history,” Takala said. “It’s a customer called Planet Fitness, which is the largest low-cost operator in the United States and in the world. And we expect that contract to be worth at least $30 million over the two-year duration cycle.”
Peak Performance
Amer Sports in April announced the acquisition of Peak Performance AB from the Danish fashion company IC Group in April for €255 million). The deal closed June 29.
Based in Stockholm, Sweden, Peak Performance is a premium sports fashion brand with net sales of €145 million and EBIT of €16.5 million in the last 12 months. As a result of the transaction, the approximately 300 Peak Performance employees will become part of the Amer Sports Group.
On Thursday’s call, Takala said the company wouldn’t comment specifically on Peak Performance since the acquisition won’t be accretive to growth and profit until the third quarter.
But, he added, “The building blocks are quite well in place, including, of course, all of the transformation areas which continue to drive the business forward.” And, “… it did indeed accelerate our strategic transformation and especially so in the areas of softgoods and direct to consumer. … And of course, the Peak Performance takes the company toward areas of faster growth and profitability as well as better asset efficiency. We will take a deeper look into Peak Performance in the September Capital Markets Day so not more about it here today.”
Also, the company said that in conjunction with the acquisition of Peak Performance, Amer Sports in June established a new apparel category structure with a dedicated leadership to enable faster growth and scale & synergy across the apparel brands Arc’teryx, Salomon and Peak Performance.
Jon Hoerauf, general manager, Arc’teryx, was appointed president, Amer Sports Apparel Category, and member of Amer Sports executive board.
Global & U.S. Outlook
The outlook remains positive for Amer Sports, whose other brands are Salomon, Atomic, Mavic, Wilson and Precor. The company is especially excited that the U.S. market is poised for a rebound after two years of modest sales increases.
“Encouragingly, after two years of low growth in the U.S., we are now starting to rebound towards mid-single-digit growth,” Takala said.
Footwear continues to grow at double-digit level, he said, and “going into 2019, we expect to re-ignite footwear growth globally.”
“As always, we focus on our sustainable growth model, and throughout 2018, we continue to renew our footwear distribution footprint for better alignment with our target consumer profile and brand equity, leading to some adverse topline impact especially in EMEA,” Takala said.
Amer’s full financial statement is here.
Photo courtesy Amer Sport
[author] [author_image timthumb=’on’]https://s.gravatar.com/avatar/dec6c8d990a5a173d9ae43e334e44145?s=80[/author_image] [author_info]Eric Smith is Senior Business Editor at SGB Media. Reach him at eric@sgbonline.com or 303-578-7008. Follow on Twitter or connect on LinkedIn.[/author_info] [/author]
