Amer Sports, Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Arc’teryx: Fourth quarter saw strong growth with 29% omni-comp. Opened 8 net new retail stores in Q4, with footwear as the fastest-growing category. Women's segment grew double digits. New leadership and Veilance brand development.
• Salomon: Salomon sneakers surpassed $1 billion in sales in 2024. Accelerated growth in Q4 across regions, opened new stores in Europe and Asia, direct-to-consumer as key growth channel.
• Wilson: Ball & Racquet segment growth continued, Wilson returned to number one U.S. market share in Performance Racquets. Softgoods doubled in 2024, opened new shops in China and North America.
• Regional: Greater China and APAC had strong growth, Americas and EMEA accelerated, outdoor trend in China remains strong, with premium sports and outdoor market being a key growth area.

Segment Performance

• Technical Apparel: Revenues increased 33% to $745 million, led by Arc’teryx. Adjusted operating margin expanded 130 basis points to 24.3%.
• Outdoor Performance: Revenues increased 13% to $594 million, driven by Salomon footwear, apparel, bags, and socks. Adjusted operating profit margin expanded 190 basis points to 11.1%.
• Ball & Racquet: Revenue increased 22% to $296 million, driven by Racquet Sports and Softgoods. Adjusted operating profit margin increased 660 basis points to negative 3.7%.

Guidance

• Full Year 2025: Expected reported group revenue growth 13%-15% (assuming 250 basis points FX drag), adjusted gross margin 56.5%-57%, adjusted operating profit margin 11.5%-12%, adjusted diluted EPS $0.64-$0.69. Segments: Technical Apparel ~21% margin, Outdoor Performance ~9.5% margin, Ball & Racquet 3%-4% margin.
• First Quarter 2025: Expected reported revenue growth 14%-16% (assuming 300 basis points FX drag), adjusted gross margin 56.5%-57%, adjusted operating profit margin 11%-11.5%, adjusted diluted EPS $0.14-$0.15.

Risks

• FX Headwinds: Unfavorable foreign exchange impact on reported financial results.
• Tariffs: Contemplated new tariffs on imports from China, Canada, Mexico, and Vietnam could impact certain segments, particularly Ball & Racquet.
• Macro Uncertainties: Uncertainties affecting margin expectations, with focus on low end of margin range initially.

Question and Answer

Q: Can you update us on the longer term store targets for Arc’teryx?

A: Stuart Haselden mentioned they intend to open 25 to 30 net new stores in 2025, with potential store counts in North America (~200), Europe (75-100), APAC outside China (75-100), and Mainland China (150-200), with estimates likely conservative and reevaluated based on geography success.

Q: Could you elaborate on drivers of the comp acceleration to nearly 30% at Arc’teryx in the fourth quarter? Any change in demand trends post holiday?

A: Stuart Haselden said broad-based strength across comp KPIs, with traffic being the biggest driver (both in-store and online), healthy conversion, and strong momentum continuing into 2025. Inventory and in-stocks improved, especially for footwear.

Q: As you look to sustain strong revenue growth, can you elaborate on investments in SG&A?

A: Andrew Page stated they are focused on new store build-out, consumer connection online and in-store, and infrastructure investments like ERP system and logistics. SG&A in 2025 is expected to be relatively flattish as prior investments start to scale.

Q: How are you thinking about growth in 2025 on the footwear and women’s side of Arc’teryx?

A: Stuart Haselden said footwear growth is a big focus, with footwear growing over 60% in 2024 and potential to be over 20% of sales in coming years. Women’s segment grew double digits in Q4, approaching ~25% of total sales, with plans to balance gender mix in apparel. Wholesale distribution is important for footwear, especially in the U.S.

Q: About regional performance, should we assume similar mid-single digit growth rate for 2025?

A: Andrew Page said all regions are expected to continue growing well, with North America seeing recovery due to Wilson's business, and James Zheng added EMEA has a solid plan to speed up Softgoods and footwear penetration, with positive trends continuing.