Bolstered by constant-currency growth of 48 percent for its Technical Apparel segment that includes the Arc’teryx business, Amer Sports delivered Q1 sales and profitability above guidance in Q1. Operating profit fell by 16 percent to $109.0 million from $130.4 million in the period ended March 31. Ebit tumbled by 67 percent to $15.1 million and net income slipped by 64 percent year-over-year to $6.9 million from $19.0 million in the year-ago period. Gross margin improved by 120 basis points to 54.0 percent from $52.8 percent.
Total revenues rose by 12.6 percent to $1,182.9 million from $1,050.3 million, fueled by a 44 percent year-over-year increase to $510 million in technical apparel. Segment Dtc sales increased by 46 percent, fueled by 19 new-owned stores, and grew by 40 percent in the wholesale channel. Geographically, Asia-Pacific paced segment sales growth followed by the Americas, Greater China, and EMEA. But the segment’s adjusted Q1 operating profit margin contracted by 40 basis points to 23.0 percent due to a difficult year-over-year comparison and currency impact.
Outdoor Performance segment sales, meanwhile, increased by 6 percent in Q1 to $400 million on a mid-teen percentage increase in Salomon soft goods that was partially offset by lower winter sports equipment sales that were negatively impacted by unseasonable weather and high inventory levels in the market. Dtc segment sales rose by 42 percent, but wholesale channel revenues dipped by 3 percent and were hurt by a challenging environment in the Americas. Segment-adjusted operating profit margin fell by 340 basis points to 4.9 percent, which the company attributed to higher SG&A expenses.
Ball Sports revenues fell by 14 percent to $273 million as the Wilson business continued to be constrained by challenges in its core U.S. market. Declines in other categories offset a sales gain for Wilson sportswear. The segment’s adjusted operating margin declined by 1,040 basis points to 4.0 percent as gross margin dipped due to higher discounts and an unfavorable product mix.
With the results, Amer Sports updated its FY guidance for the 12 months ending Dec. 31. Reported revenues are forecast to increase by a mid-teen percent. The estimated annual gross margin is pegged at 54.0 percent with the operating margin range forecast at 10.5 to 11.0 percent. Fully diluted EPS is calculated at the high end of the previous $0.30 to $0.40 a share guidance. The outlook for each segment – Technical Apparel, more than a 25 percent revenue increase and an operating margin slightly above 20 percent; Outdoor Performance annual sales are pegged to grow by a mid-to-high-single digit percentage with a corresponding segment operating margin at a high-single percentage rate; and Ball Sports’ annual sales are expected to increase by a low- to high-single-digit percentage with a corresponding operating margin increase by a low- to high-single-digit percentage.
