Amer benefits from a strong 21% sales increase in the quarter

Replicating the pattern of the last quarters, footwear and apparel marketed by Salomon and Arc'teryx fueled the quarterly sales increase of their owner, the Amer Sports group. Hiking and trail-running products pushed up the group's footwear sales, particularly in Europe, while all its apparel ranges performed well. Furthermore, pre-orders for these categories are robust, indicating that the growth should continue in the coming quarters.

Amer Sports' sales jumped by 21 percent for the quarter to €449.1 million, an increase of 12 percent in constant currencies. The company achieved improvements in sales as well as earnings, partly on the back of restructuring and strategic changes launched last year.

Footwear contributed a sales increase of 45 percent to €91.1 million, which would still be an increase of 34 percent in constant currencies. Apparel sales were up by 37 percent to €38.9 million, and the underlying sales rise was an increase of 28 percent.

Other categories in Amer's winter and outdoor division did well. Sales of winter sports equipment by Atomic and Salomon expanded by 11 percent to €46.9 million, up by 6 percent in constant currencies. Cycling sales under the Mavic brand remained firm, up by 17 percent to €34.4 million, and the increase reached 8 percent in constant currencies, with buoyant sales of apparel and footwear.

Sports instruments, marketed under the Suunto brand, delivered a sales hike of 16 percent to €22.2 million, equivalent to a rise of 7 percent in constant currencies, coming mostly from the outdoor and training categories. In this context, the group said it sold Fitz-Wright, a Canadian diving suit company, to Huish Acquisition earlier this month. The divested company reported sales of about €9 million last year.

The entire winter and outdoor division's sales jumped by 29 percent to €233.5 million, up by 20 percent in constant currencies. The segment's turnover increased at a double-digit rate in all regions but the growth was sharpest in Americas, up by 29 percent in constant currencies, owing to snowy weather conditions. This compares with a sales hike of 19 percent in Europe, the Middle East and Africa (EMEA) and 10 percent for Asia-Pacific.

Amer's ball sports division, led by the Wilson brand, ended the quarter with sales up by 9 percent to €159.0 million, an increase of 2 percent in constant currencies. They were most affected by the disaster that hit Japan last month, just as the tennis season was about to start. The division's sales in the Asia-Pacific region dipped by 11 percent in constant currencies, while they rose by 3 percent in the Americas and by 5 percent in EMEA.

The racquet sports unit in this division suffered most from the Japanese earthquake, amid an already weak Japanese tennis market. This contributed to an underlying sales decline of 3 percent for the unit, although its reported sales still climbed by 4 percent to €67.1 million.

Wilson's golf unit suffered an underlying sales decline as well, down by 5 percent, while its reported sales crept up by 1 percent to €20.6 million. On the other hand, the team sports unit raced ahead, with a sales jump of 17 percent to €71.3 million, up by 9 percent in constant currencies. The improvement was broad, with bats, basketballs and ball gloves standing out.

As for the fitness division, represented mainly by Precor, sales jumped by 24 percent for the quarter to €56.6 million, an increase of 14 percent in constant currencies, with double-digit improvements in all regions. Commercial sales were up by 13 percent, partly owing to the start of a recovery in the North American market, while the consumer business improved by 21 percent.

The group's managers were most satisfied with its gross margin, which inched up by 0.6 percentage points to 43.3 percent for the quarter, in spite of pressure on input costs. Pushed by higher sales and margins, the group's quarterly earnings before interest and tax (Ebit) excluding non-recurring items increased to €25.7 million, compared with €9.5 million the previous year. This amounts to an Ebit margin of 5.7 percent, up sharply from 2.5 percent last year.

The Ebit of the winter and outdoor division jumped to €9.3 million, up from €1.7 million for the first quarter of last year. In ball sports, it climbed by 23 percent to €17.7 million. Most encouragingly, the fitness unit became profitable again, with Ebit of €3.3 million compared with an operating loss of €0.7 million at the same time last year.

Operating expenses increased by €14.9 million, as the company raised investments to prepare for further growth in line with its development plans, which call for setting up category-based operations, investments in distribution and customer service. The group ended the quarter with net profits of €17.3 million, up from just €0.3 million last year.

For the full year, measures taken to increase the efficiency of Amer's winter sports equipment unit should have an impact on its profitability. The Amer group predicts that its sales will expand at a rate clearly above the 5 percent annual rate that it has set for the long term in constant currencies. Furthermore, it expects that Ebit excluding non-recurring items will be higher than the 6.2 percent ratio achieved last year.