Amer Sports, Inc., the parent of Arc’teryx, Salomon, Wilson, Peak Performance, Atomic, and Armada, among others, reported that its Technical Apparel segment, which primarily includes the Arc’teryx brand business but also supports the Peak Performance brand, increased 34 percent, or 33 percent in constant-currency terms, to $520 million in the 2024 third quarter.
The company said Arc’teryx segment omni comp growth was up 20 percent year-over-year (y/y) for the third quarter, a sequential decline from the 33 percent growth in the 2024 second quarter, but still a strong performance comping against a 68 percent omni comp gain in the third quarter of last year. Omni-comp growth reflects year-over-year revenue growth from owned-retail stores and e-commerce sites that have been open for at least 13 months,
The segment slightly de-levered in the quarter due to investments in opening stores. Third quarter Adjusted operating margin increased 370 basis points y/y to 20.0 percent.
On a conference call with analysts, Amer Sports CEO James Zheng said Arc’teryx delivered another very strong quarter with healthy growth across all regions, channels and categories, especially footwear, women’s, and hard shell jackets. The brand momentum was said to be most evident in its strong performance against a very difficult growth comparison from last year.
Direct-to-consumer (DTC) remains the brand’s core growth engine, but Zheng said that Arc’teryx also experienced strength in the Wholesale channel, which grew 26 percent y/y in the quarter. Arc’teryx DTC momentum was fueled by new and existing consumers across all regions and channels.
U.S. Wholesale was reportedly a “standout” for the company, especially for Arc’teryx.
Regionally, the growth of the segment was led by Asia Pacific, followed by Greater China and the Americas.
“Consumers’ love for Arc’teryx in China continues to grow, and the brand’s very strong performance in APAC continued into Q3,” Zheng shared.
Technical apparel’s adjusted operating margin expanded 370 basis points y/y to 20 percent of sales, driven by a higher gross margin from a favorable product, channel and regional mix. The segment’s operating margin also benefited 200 basis points from the Q3 receipt of government subsidy payments that were expected in the fourth quarter.
Arc’teryx is reportedly executing well against its retail expansion plan. In Q3, the brand opened nine net new brand stores globally, bringing the total number of owned-brand stores to 134. Key new locations include four stores in the U.S., two in Canada, two in Australia, two in China, and one in Germany.
“We will open net 30 new Arc’teryx stores in 2024, the highest ever in one year,” said Amer Sports CFO Andrew Page. “At this time, we do not expect to significantly increase the number of annual Arc’teryx openings from this run rate.”
Arc’teryx opened another brand store at the Fashion Island Mall in Newport Beach, CA, bringing the total to four stores in the LA basin, an area Zheng called an “epicenter market“ for the company. The brand has resonated with LA consumers, giving us confidence that Arc’teryx has large growth potential even in warmer markets. Doubling down on our commitment to the LA community, we are hosting our first-ever Arc’teryx Backcountry Academy in Mammoth, CA this winter, a reflection of the opportunities we see in this region.”
In Europe, Arc’teryx opened five net new stores year-to-date, and the company reported seeing good results, including strong affinity with tourists and locals.
In Paris, local consumers are embracing our store in Le Marais,“ Zheng emphasized. “Thirteen years of engaging with French and European alpinists at our climbing academy in Chamonix had generated significant brand recognition and appreciation with French consumers even before we opened our first store there.“
Arc’teryx also opened its New York City flagship store in September.
“This new outlet store features our most pinnacle expression of ReBird, including shoppable ReGear in-store for the first time, our large ReBird service center facility for care and repair, and our unique in-store coffee shop,“ said Zheng. “This unique flagship delivers the brand in a slightly new way in the U.S., taking cues from the success of our retail format in China, presenting much of the assortment by activity instead of by category, which creates a strong energy and engaging presentation of our products. The store is performing very well relative to our internal expectations in its first few months.”
On the product side, Zheng called out Arc’teryx footwear and its early trajectory since launching its first in-house line, which grew by double digits across all regions and channels in the third quarter.
“The Kragg continues to be wildly successful, including our latest insulated version for cooler fall and winter temperatures,“ Zheng detailed. “This is a great example of how we will add new dimensions to our key franchise with ideas and inspiration coming through collaboration with our [indiscernible] teams.”
Zheng said the brand also introduced a new hiking model, Kopec, which delivered strong early results.
“Overall, we are extremely pleased with consumer reception to what we believe is the best line of technical performance footwear designed for mountaineering, and because of its unique position in the sneaker marketplace, strong sales in our DTC channels and enthusiastic features from key wholesale accounts, our confidence is growing that footwear will become a very sizeable and profitable growth avenue for Arc’teryx, both in owned retail and in certain brand-relevant wholesale accounts,“ Zheng suggested.
Zheng said its women’s apparel business continues to perform “extremely well,“ growing very strong double digits, outpacing overall brand growth, and representing nearly one-quarter of sales in the third quarter.
Lastly, Zheng provided an update on the brand’s community engagement programs. This summer, Arc’teryx launched gym residencies in climbing gyms from New York to Paris to San Francisco as part of the brand’s Summer of Climb.
“Investments in brand awareness and activities that feed off the global excitement and the popularity of climbing are driving awareness, cultural relevancy, and position Arc’teryx at the heart of this phenomenon,“ the CEO explained. “Our academies continue to generate strong buzz and an affinity for the brand, including our largest ever academy in the French Alps in Chamonix with 650-plus participants, ranging from beginners to world-class climbers.”
Looking ahead, Amer Sports expects 2024 full-year revenue growth for the Technical Apparel segment to increase ~34 percent y/y and segment operating margin to come in slightly above 20 percent of sales for the year.
Image courtesy Arc’teryx/Amer Sports Inc.
See below for additional SGB Media coverage of the broader Amer Sports business for the third quarter.
EXEC: Amer Sports Sees Sharp Contrast Between West and East in Q3; Provides China Update
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
