A financial turning point in Amer Sports’ journey occurred in Q4. Arc’teryx is still the strongest brand in Amer’s portfolio.
Amer Sports has reached a “financial turning point” in its journey, according to Andrew Page, CFO of the Arc’teryx, Salomon and Wilson parent. The company reports strong Q4 and FY24 results that include strong free cash flow and a “continued transformation” of its capital structure.
There was a 224 percent increase in operating profit to $193.6 million from $59.8 million for the three months ended Dec. 31. Ebit was $70.9 million against a loss of $55.1 million, as net income hit $17.1 million versus a year-ago loss of $94.9 million. Final period revenues rose by 23 percent to $1,635.5 million from $1,327.5 million, as gross margin expanded by 370 basis points to 56.1 percent from 52.4 percent.
Each of the group’s segments posted double-digit, constant currency increases in sales, led by a 33 percent gain for Technical Apparel to $745 million and its Arc’teryx business. The Outdoor Performance segment generated a 13 percent sales increase to $594 million on strong sales gains for Salomon footwear, apparel, bags and socks, with double-digit gains in DTC across Asia-Pacific, Greater China and the EMEA. Meanwhile, the Ball & Racquet Sports unit produced 22 percent year-over-year revenue improvement to $296 million.
| Amer Sports - Income | |||
|---|---|---|---|
| 2024 | 2023 | Change | |
| Q4, ended Dec. 31 ($ million) | |||
| Revenue | 1,635.5 | 1,327.5 | 23.2% |
| Cost of goods sold | 718.0 | 631.8 | 13.6% |
| Gross profit | 917.5 | 695.7 | 31.9% |
| SG&A expenses | 732.3 | 646.0 | 13.4% |
| Impairment losses | -0.6 | -2.2 | 72.7% |
| Other operating income | 7.8 | 7.9 | -1.3% |
| Operating profit | 193.6 | 59.8 | 223.7% |
| Interest income | 2.5 | 1.9 | 31.6% |
| Interest expense | 64.1 | 109.4 | -41.4% |
| Forex losses (net) & other finance costs | 43.6 | 7.3 | 497.3% |
| Loss on debt extinguishment | 17.5 | – | – |
| Net finance cost | 122.7 | 114.9 | 6.8% |
| Pre-tax | 70.9 | -55.1 | – |
| Tax | 53.8 | 39.8 | 35.2% |
| Net income | 17.1 | -94.9 | -118.0% |
| Diluted EPS | 0.03 | -0.25 | -112.0% |
| FY, ended Dec. 31 ($ million) | |||
| Revenue | 5,183.3 | 4,400.4 | 17.8% |
| Cost of goods sold | 2,311.5 | 2,092.3 | 10.5% |
| Gross profit | 2,871.8 | 2,308.1 | 24.4% |
| SG&A expenses | 2,430.4 | 2,014.5 | 20.6% |
| Impairment losses | 1.9 | 2.4 | -20.8% |
| Other operating income | 31.3 | 11.2 | 179.5% |
| Operating profit | 470.8 | 302.5 | 55.6% |
| Interest income | 8.8 | 6.4 | 37.5% |
| Interest expense | 219.0 | 397.6 | -44.9% |
| Forex losses (net) & other finance costs | 67.6 | 15.8 | 327.8% |
| Loss on debt extinguishment | 31.8 | – | – |
| Net finance cost | 309.6 | 407.0 | -23.9% |
| Pre-tax | 161.2 | -104.6 | – |
| Tax | 82.8 | 104.2 | -20.5% |
| Net income | 78.4 | -208.8 | – |
| Diluted EPS | 0.14 | -0.54 | – |
| Source: Amer Sports | |||
The wholesale market continues to be soft for winter sports equipment in EMEA and North America, where ski equipment sales stabilized after a strong period through and beyond the Covid epidemic. Amer Sports is projecting “relatively flat” winter sports equipment sales in 2025 but longer-term growth by low-single digits annually.
Arc’teryx – Amer’s strongest brand
The brand delivered over $2 billion in FY24 revenues and had strong Q4 sales with growth across all regions, channels and categories. Results were especially strong in footwear and for women. Management expresses confidence that Arc’teryx footwear “will become a sizeable and profitable growth avenue” for the brand in its own retail and in certain brand-relevant wholesale accounts. Arc’teryx opened eight retail stores in Q4, bringing its FY24 total count to 33 doors. There are plans to open another 25 to 30 net stores this year.
The brand recently named Nike veteran Matt Bolte as chief merchandising officer, former Vans’ executive Marissa Pardini as general manager of its Veilance brand and former Lululemon exec Ben Stubbington as the creative director for Veilance. Additionally, Stefano Saccone will join the group as president of the Peak Performance brand on April 1.
Eye on EMEA
Amer has remarked two trends in the market. Salomon performance sneakers “are experiencing a demand recovery,” and the brand’s pre-orders have shifted to positive solid growth after negative trends over the last two years. In Q4, Salomon opened new stores in London and Milan.
CEO James Zheng told analysts that the company has a solid plan to accelerate its soft-goods business in the EMEA, largely through a major focus on footwear.
| Amer Sports - Revenues | |||
|---|---|---|---|
| 2024 | 2023 | Change | |
| Q4, ended Dec. 31 ($ million) | |||
| Regions | |||
| Americas | 584.4 | 507.9 | 15.1% |
| EMEA | 491.2 | 454.6 | 8.1% |
| Greater China | 383.9 | 249.5 | 53.9% |
| Asia-Pacific | 176.0 | 115.5 | 52.4% |
| Total | 1,635.5 | 1,327.5 | 23.2% |
| Channels | |||
| Wholesale | 802.7 | 758.5 | 5.8% |
| DTC | 832.8 | 569.0 | 46.4% |
| Total | 1,635.5 | 1,327.5 | 23.2% |
| Segments | |||
| Technical Apparel | 745.0 | 559.4 | 33.2% |
| Outdoor Performance | 594.3 | 525.6 | 13.1% |
| Ball & Racquet Sports | 296.2 | 242.5 | 22.1% |
| Total | 1,635.5 | 1,327.5 | 23.2% |
| FY, ended Dec. 31 ($ million) | |||
| Regions | |||
| Americas | 1,859.0 | 1,745.6 | 6.5% |
| EMEA | 1,513.4 | 1,457.6 | 3.8% |
| Greater China | 1,298.1 | 844.8 | 53.7% |
| Asia-Pacific | 512.8 | 352.4 | 45.5% |
| Total | 5,183.3 | 4,400.4 | 17.8% |
| Channels | |||
| Wholesale | 2,916.3 | 2,811.3 | 3.7% |
| DTC | 2,267.0 | 1,589.1 | 42.7% |
| Total | 5,183.3 | 4,400.4 | 17.8% |
| Segments | |||
| Technical Apparel | 2,194.3 | 1,614.1 | 35.9% |
| Outdoor Performance | 1,835.5 | 1,674.2 | 9.6% |
| Ball & Racquet Sports | 1,153.5 | 1,112.1 | 3.7% |
| Total | 5,183.3 | 4,400.4 | 17.8% |
| Source: Amer Sports | |||
A glance at FY24 results
Full-year operating profit improved by 56 percent year-over-year to $470.8 million, as Ebit moved to a $161.2 million profit versus a year-ago loss of $104.6 million. FY24 net income hit $78.4 million against a $208.8 million loss in FY23. The annual gross margin widened by 290 basis points to 55.4 percent from 52.5 percent, while annual sales grew by 18 percent to $5.18 billion from $4.4 billion.
Annual DTC revenues improved by nearly 43 percent to $2.27 billion, as wholesale increased by 3.7 percent to almost $2.92 billion. Regionally, sales in FY24 rose by 3.8 percent to $1.51 billion in EMEA, by nearly 54 percent to $1.3 billion in Greater China, by 6.5 percent to $1.86 billion in the Americas, and by 45.5 percent to $512.8 million in Asia-Pacific.
By segment last year, Technical Apparel produced adjusted operating profit of $460.4 million on 36 percent revenue growth to $2.19 billion. Outdoor Performance adjusted operating profit increased by 14 percent to $172.3 million on a 9.6 percent sales improvement to $1.84 billion. Finally, Ball & Racquet Sports annual adjusted operating profit slipped by 22.5 percent to $23.7 million, despite a 3.7 percent FY24 revenue expansion to $1.15 billion.
FY25 forecast
Despite a projected 250 basis point drag, annual revenues are forecast to grow in the 13 to 15 percent range. Technical Apparel is forecast to generate an operating margin of about 21 percent on sales growth of 20 percent. Outdoor performance annual sales are pegged to expand in the low-double-digit range while producing an operating margin of approximately 9.5 percent. The Ball & Racquet segment is predicted to produce an operating margin of 3 to 4 percent on revenue growth in the low-to-mid-single-digit range.
