Amer Sports, Inc. (AS) Earnings

Management highlights

- Overall Business Momentum * All segments, geographies, and channels delivered strong performance in Q1 FY2026, with 32% total reported sales growth (26% ex-currency) and 160 basis points of adjusted operating margin expansion. * DTC represented 50% of total group revenue, growing 45% led by Salomon and Arcteryx; wholesale grew 21% led by Salomon. All four regions achieved double-digit revenue growth, led by 53% growth in Asia Pacific and 45% growth in Greater China. * Strong momentum has continued into the start of Q2 FY2026. - Arcteryx (Technical Apparel) Operational Highlights * Delivered broad-based strength across regions, channels, and categories, with accelerating growth in North America and 19% same-store sales growth. Women's category grew faster than all other categories, reaching nearly 25% of total revenue, driven by improved product fit, style, and expanded assortments. * Footwear delivered strong growth driven by existing core styles and the new Silent 2 technical children's racing shoe launch. The Valence sub-brand delivered strong double-digit growth. * Unaided brand awareness in the U.S. grew to 12% from 8% in fall 2025, driven by top-of-funnel marketing. 30-35 net new Arcteryx stores are planned for full year 2026, including 10-12 net new stores in Greater China. - Salomon (Outdoor Performance) Operational Highlights * Global demand for Salomon's outdoor sneakers is inflecting, with clear growth acceleration in North America and rapid growth across Greater China, Korea, and Japan. * The epicenter strategy (opening brand stores in key global metro markets alongside strategic elevated wholesale distribution) is driving rising brand awareness and accelerating revenue. In Q1, 9 net new Salomon stores were opened in Greater China, 5 net new stores were opened in Japan/Korea, the first brand store was opened in Copenhagen Denmark, and the first Salomon store was opened in Mexico City. * Full year 2026 plans call for 45 net new Salomon stores in Greater China (up from the prior 35 target), 7-10 net new stores in the Americas, and further expansion across key EMEA epicenters. U.S. wholesale expansion is underway, with Salomon footwear now launching at new retail partners Foot Locker and JD Sports, after expanding shelf space at existing partners Nordstrom and REI. - Ball & Racket Operational Highlights * Wilson Tennis 360 continues to deliver strong momentum globally, with exceptional double-digit growth in Wilson soft goods across all major regions. The new Blade 10 racket launch was well received, with strong reorder demand and on-tour validation from top players. * 40 net new Wilson Tennis 360 shops are planned for full year 2026 in China, and the Wilson Tennis 360 footprint at Dick's Sporting Goods will expand from 250 to 400 doors by end of 2026. - Balance Sheet & Cash Flow * Ended Q1 with $539 million of net cash; inventory grew 33% year-over-year (slightly above 32% sales growth), driven by early receipt of seasonal goods, higher in-transit inventory from increased ocean freight usage, FX translation, and added inventory from the Arcteryx Korea acquisition. Inventory growth is expected to normalize in H2 2026. Generated $172 million in operating cash flow, up from $164 million in Q1 FY2025.

Guidance

- Full year 2026 overall guidance was raised across all metrics from prior levels: * Revenue growth guidance increased to 20-22% from the prior 16-18%, including a 200-250 basis point FX tailwind at current exchange rates. * Adjusted gross margin guidance increased to 59-59.5% from the prior ~59%. Adjusted operating margin guidance increased to 13.4-13.7% from the prior 13.1-13.3%. * Adjusted diluted EPS guidance increased to $1.18-$1.23 from the prior $1.10-$1.15. - By segment, full year 2026 revenue growth guidance was raised across all segments: * Technical apparel revenue growth increased to 22-24% from the prior 18-20%; adjusted operating margin guidance is maintained at ~22%. * Outdoor performance revenue growth increased to 22-24% from the prior 18-20%; adjusted operating margin guidance increased to 15.0-15.5% from the prior 14.5-14.8%. * Ball & racket revenue growth increased to 10-12% from the prior 7-9%; adjusted operating margin guidance is maintained at 4.7-5.0%. - Second quarter 2026 guidance: * Group reported revenue growth is expected to be 22-24%, including a 200-250 basis point FX tailwind at current exchange rates. * Adjusted gross margin is expected to be ~59.5%, and adjusted operating margin is expected to be 6-7%. Adjusted diluted EPS is expected to be 8-10 cents. - Capital expenditure guidance is maintained at ~$400 million, primarily to support retail expansion and IT infrastructure investments. The company noted it is well positioned to outperform guidance if current strong demand trends continue.

Segment performance

1. Technical Apparel: Revenues increased 33% year-over-year to $885 million, contributing 45.3% of total company revenue. DTC revenue grew 41%, while wholesale revenue grew 16%. Adjusted operating margin expanded 250 basis points to 26.4%. Growth was led by Arcteryx, with strong double-digit growth across all regions, led by Asia Pacific and Greater China. 2. Outdoor Performance: Revenues increased 42% year-over-year to $714 million, contributing 36.6% of total company revenue. DTC revenue grew 57%, while wholesale revenue grew 34%. Adjusted operating profit margin expanded 480 basis points to 20.4%. Growth was driven by strong performance across Salomon footwear, apparel, and accessories, with acceleration across all geographies led by Greater China and APAC. 3. Ball & Racket: Revenues increased 13% year-over-year to $347 million, contributing 17.8% of total company revenue. Growth was led by strong double-digit growth in Wilson soft goods and racket sports. Adjusted operating profit margin decreased 370 basis points to 3.6%, due to increased investments to support Wilson Tennis 360 growth and higher freight/tariff costs.

Risks & headwinds

- The ongoing Middle East conflict has had an immaterial impact on business to date, as the region represents less than 1% of global sales. However, sustained elevated oil prices from the conflict could create future logistical and cost headwinds over the longer term. * While annual shipping contracts have been renegotiated and locked in for 2026, sustained elevated oil prices could eventually lead to trickle-down cost increases, though no material impact is expected currently, and no quantification of potential future impact is available. * Forward-looking statements are subject to general risks and uncertainties that could cause actual results to differ materially from current expectations, including macroeconomic weakness that could impact consumer discretionary spending. * Salomon faces supply constraints that may limit its ability to meet unexpectedly strong demand in the remainder of 2026. * The timing and amount of potential tariff refunds following the Supreme Court ruling on IEPA tariffs remains uncertain, and the company has not booked any upside from unconfirmed future refunds.

Analyst Q&A

• Q: Given the current weak macro environment, what is driving management's confidence to raise guidance, and what is the outlook for Salomon's U.S. running specialty distribution expansion?

  A: The company is meaningfully through Q2, and current trending has been strong, building on the momentum from Q1. A 200-250 basis point FX tailwind is also factored into the Q2 growth outlook. Amer Sports' differentiated premium innovative outdoor/sport products benefit from ongoing consumer prioritization of health and outdoor activities, giving them resilience in a weak macro. For Salomon, the company currently covers over a third of the U.S. running specialty distribution, is investing heavily in product innovation for running and gravel, and has early strong momentum in 2026, with a cautious, door-by-door strategy focused on partner support and driving sell-through.

• Q: Is there any moderation of momentum across global regions due to geopolitical issues, what are real-time trends in China, and what is driving Arcteryx's same-store sales acceleration with any signs of softening in Q2?

  A: The company continues to see strong broad-based momentum across all global regions through the middle of Q2, with no visible impact from geopolitical tensions to date. Premium sports and outdoor remains one of the healthiest consumer segments. In China, momentum remains strong following Q1 tailwinds from the timing of Chinese New Year and continued strength through the May 1 holiday period. For Arcteryx, strong Q1 same-store sales trends have continued into Q2, driven by healthy traffic growth, improving brand awareness, strong conversion, growing guest acquisition and retention, increasing average spend per guest, and rising productivity of mature stores, which is reflected in the updated guidance.

• Q: What is Salomon's strategy for U.S. big box wholesale expansion, are there limitations to reaching broader distribution, and what would be the impact of sustained elevated oil prices?

  A: Salomon's expansion strategy is demand-driven: it prioritizes building brand awareness in key epicenter cities first, before expanding broadly to big box retailers to ensure consumer demand exists to drive strong sell-through. Currently, Salomon is accelerating distribution at Foot Locker and JD Sports after building strong traction at REI and Nordstrom, following this cautious, gradual approach. For oil prices, while annual freight contracts are locked in for 2026, sustained elevated prices would eventually have some trickle-down cost impact, but any impact is currently nominal, and no material negative impact is expected for the full year.

• Q: How is Arcteryx progressing in the U.S. market, what is the store growth opportunity, and how is the women's category progressing?

  A: Arcteryx is seeing accelerating growth and conversion in the U.S., continuing the trend from 2025, with improving brand awareness as it builds out key epicenter markets. The company still sees a 200-store long-term potential for North America, and it is still less than halfway there, remaining on track for expansion. The women's category grew over 40% year-over-year in Q1, increasing penetration to nearly 25% of total revenue. The company is ahead of schedule on its target to reach over 30% of revenue from women's by 2030, driven by strong demand for redesigned core models and expanded bottom categories.

• Q: How is Salomon balancing the fast growth of its sports style segment versus performance, and is there risk of the mix becoming too skewed to sports style?

  A: Salomon's sports style growth is built on its authentic core as a performance outdoor brand, with leading positions in winter sports, trail running, and outdoor footwear that drive consumer trust and desirability for its sport style offerings. To balance the mix, the company is investing heavily in road running and gravel running, which is the fastest growing category within Salomon on a small base. This ongoing investment in performance will create a balanced long-term portfolio for the brand.