Dive Brief:
- Amer Sports on Tuesday reported third-quarter revenue rose 17% to $1.35 billion, up from $1.15 billion the prior year, according to a company press release. At the same time, Amer Sports announced two management changes, including a new CEO for its Salomon brand.
- Salomon Chief Product Officer Guillaume Meyzenq has been appointed president and CEO of the outdoor performance brand, effective Jan. 1. He replaces Franco Fogliato, who left the company in April for personal reasons. Separately, Amer Sports’ Chief Operating Officer Michael Hauge Sørensen is stepping down and will return to his former role as adviser to the board of directors.
- Operating profit in the quarter grew to $177 million, rising 69% year over year. The company swung from a prior-year loss of $35.9 million to a net income of $56.2 million. The outdoor performance category, which includes Salomon, saw revenue grow 8% to $534 million.
Dive Insight:
Amer Sports will mark one year as a publicly traded company in February. Ahead of that milestone, it’s on track to maintain its top-line momentum into the fourth quarter, Wells Fargo analysts led by Ike Boruchow said in a Tuesday note.
Amer Sports has three highly differentiated segments, Boruchow said. While technical apparel, outdoor performance and ball and racquet -- led by Arc’teryx, Salomon and Wilson, respectively -- each represent about one-third of sales, their direct-to-consumer penetration, growth rates, gross margin and EBITDA are all different.
Wells Fargo’s analysts said technical apparel is the most compelling segment, with the potential for 18% to 20% top-line growth and 20% margins sustainable for the next several years. Led by Arc'tyrex, revenue in that segment rose 34% to $520 million in Q3, up from $389 million the prior year. Amer Sports said that represents 20% comp growth from owned retail stores and e-commerce sites open at least 13 months and was helped along by a 40% expansion of DTC.
But Salomon also has growth opportunities ahead, particularly in footwear. Meyzenq, Salomon’s incoming leader, has been with the brand for 28 years and Amer Sports’ CEO James Zheng said on a call with analysts that the executive “brings a strong track record of operational excellence and strategic innovation in diverse leadership roles.” Additionally, Meyzenq’s leadership was instrumental to the doubling of Salomon footwear sales over the last five years. He also created and developed the brand’s sports style category, which now represents nearly one-third of Salomon sneaker sales.
“We continue to enjoy strong growth margin expansion driven by the pricing power of our brands and a healthy mix shift toward our highest margin franchise, Arc’teryx,” Zheng said, according to an earnings call transcript. “Within our other performance segments, Salomon soft goods continue to grow double digits, led by footwear, while ball and racquet sales trends improved, reaching double-digit growth in Q3.”
The company opened 30 net new Arc’teryx stores this year, according to Amer Sports’ CFO Andrew Page, and expects a similar number next year. A flagship, two-level Arc’teryx store on Broadway in New York City, which opened in September, is among them.
The company has similarly pursued physical retail expansion for its Wilson and Salomon brands. Overall, the company ended the quarter with a footprint of 453 stores, up from 304 a year ago, with store count growth across segments.
“Given the strength in our brands, we are choosing to opportunistically accelerate high-return investments to support our key growth opportunities, including marketing and store build-out,” Page said during the earnings call.
As a result of the strong performance, Amer Sports also raised its full-year guidance. The company now expects revenue growth of 16% to 17%, up from 15% to 17% previously. By segment, technical apparel is expected to lead with about 34% revenue growth, up from its prior forecast of a “greater than 30%” rise.
