Amer Sports, Inc. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Amer Sports' strong momentum continued in Q3 with all segments performing well. Led by Salomon footwear growth, Arc'teryx omni-comp reacceleration, and Wilson Tennis 360 growth. All 4 regions achieved double-digit revenue growth in Q3.
• Key brand highlights: Arc'teryx had broad-based strength across regions, channels, and categories, with footwear and women's segments growing strongly. Salomon footwear saw momentum across regions, with Sportstyle and Performance products in demand. Winter Sports Equipment had a strong Q3 with healthy shipments and order books. Wilson Tennis 360 had strong sales, with Wilson Softgoods growing explosively.
• Addressed the September fireworks incident, stating regret and commitment to working with authorities and improving going forward.
• Technical Apparel SG&A leverage offset by headwind from government grants timing. Outdoor Performance margin expanded due to gross margin growth. Ball & Racquet margin increased due to gross margin gains offsetting some SG&A deleverage.

Segment Performance

• Technical Apparel: Revenues increased 31% to $683 million, led by Arc'teryx. Growth was fueled by 46% direct-to-consumer expansion, including a reacceleration in omni-comp to 27% from 15% in Q2 2025. Regional growth led by Asia Pacific, Americas, Greater China, and EMEA, all growing double digits.
• Outdoor Performance: Revenues increased 36% to $724 million, driven by strong performance in Salomon footwear, apparel, bags, and socks. DTC grew 67%, omni-comp was 33%, and wholesale grew 26%. Regional growth led by Greater China, APAC, EMEA, and Americas.
• Ball & Racquet: Revenues increased 16% to $350 million, driven by softgoods and racquet sports. Strong momentum in Tennis 360 globally, with softgoods more than doubling in the quarter. Regionally, growth led by China, APAC, EMEA, and slight growth in Americas.

Guidance

• Full Year 2025: Raised revenue growth guidance from 20%-21% to 23%-24%. Adjusted gross margin raised to 58%, adjusted operating margin raised to 12.5%-12.7%. Adjusted diluted EPS expected to be $0.88-$0.92 vs prior $0.77-$0.82. Adjusted operating margin for Technical Apparel expected at ~21%, Outdoor Performance raised to 13%-13.5%, Ball & Racquet maintained at 3%-4%.
• 2026: At group level, expects revenue towards high end of low double-digit to mid-teens annual growth and adjusted operating margin expansion within 30-70+ basis points.

Risks

• September Fireworks Incident: Amer Sports regretted involvement and is working with local authorities to address impacts, committed to improving going forward.

Question and Answer

Q: Have you seen a sales impact in China following the fireworks incident? If so, when do you expect sales to recover? Do you think there could be any longer-term brand repercussions?

A: Arc’teryx China sales trends were softer at the beginning of Q4 but have since rebounded as weather cooled. Confident in Arc’teryx's brand position and equity with consumers across all markets, focused on connecting with consumers and delivering great products and store experiences.

Q: Congrats on a nice quarter. So James, could you speak to your confidence in guiding 2026 revenue growth to mid-teens, which is the high end of your long-term algorithm? And then, Stuart, at Arc’teryx, could you break down the cadence of the third quarter 27% omni-comp? And if you could elaborate on the strong global momentum that you've seen in the fourth quarter or just any change in demand that you've seen as we head into holiday for the brand?

A: Jie Zheng highlighted confidence in guiding 2026 growth due to solid foundation in 2025. Stuart Haselden mentioned omni-comp momentum, healthy D2C revenue increase, strong traffic in Q3, and strong growth across regions including North America, China, and Europe, optimistic about Q4 and beyond.

Q: Let me add my congrats. I guess a higher-level question on next year's outlook, just maybe potential additional info on door growth for both technical, basically both for Salomon and Arc’teryx. And then would love to hear a little bit more about the progress on Salomon in the United States specifically?

A: Andrew Page said he would provide more store growth update in Q4 call. Guillaume Meyzenq spoke about Salomon's position in the market, authentic mountain performance, global recognition, growing cultural relevance, focus on U.S. with epicenter strategy, and confidence in accelerating in North America.

Q: Just sticking with Solomon, you're pruning back some of the distribution there, which is causing a pressure. Can you talk about when that pressure will abate? And where you are on U.S. awareness at this point for the Solomon brand?

A: Explained pruning back distribution related to non-relevant places and partner changes, expecting most change implemented by end of H1 '26, with fresh distribution setup, and confident in U.S. awareness growth through strategic distribution and brand presence.

Q: I want to ask about Wilson, specifically the Tennis 360 stores. It sounds like -- I think you said you're up to 80 stores in China. Can you just talk about the big picture long-term opportunity in China? And I think you also mentioned that the store in Dallas, I think you said is off to a good start and you're opening some more Tennis 360 stores in the U.S. Can you just talk about the Tennis 360 opportunity outside of China and how that's developed over the last 90 days in your view?

A: Andrew Page mentioned 14-15 Tennis 360 stores in North America, focusing on Southern U.S. markets, early stages of optimization, success in DICK'S shop-in-shop format, and excitement about expansion in Southern and coastal locations.

Q: On the margin guide for next year, I'm curious how much of the expansion is simply a function of business mix versus improvements that you might be seeing within each segment? And then I just wanted to ask a clarifying point on Solomon. Could you just say what is the number of doors that you're actually exiting in the -- within the Solomon wholesale business? And then what are you adding over the next 12 months?

A: Stuart Haselden said margin expansion primarily driven by gross margin expansion from mix shift. Nuanced on number of doors exiting wholesale, focusing on strategic partners, and expecting clearing through H1 '26 with fresh distribution setup.

Q: Congrats on another strong quarter. Andrew, just to kind of follow-up on Jonathan's question. The guidance for the Outdoor Performance segment margin is for a decline in Q4. Obviously, there's been a ton of upside to your guidance this year and the incremental margin you've been generating on the soft goods really seems to be flowing through. I'm just curious why the conservatism here in Outdoor Performance and how you're thinking about the margin performance of Outdoor Performance into next year?

A: Andrew Page mentioned early shipments into Q3 for sports equipment, investments in marketing and Olympics in Q4, and belief in opportunities in Q4 if demand continues, but in early stages of inflection point.

Q: I just wanted to focus on the China growth acceleration in the quarter. It definitely stands out versus a more somber narrative from a lot of your peers. So can you just help us square that difference between you and then maybe the broader Sportswear Group and then how you're thinking about industry dynamics in China into the fourth quarter and then next year?

A: Andrew Page stated satisfaction with Q3 China results, strong growth in Salomon and Wilson in China, confident in Q4 with major seasons like Golden Week and Double 11, and optimistic for 2026 in China due to unique propositions of 3 major brands attracting younger consumers.