Group 1 - The Trump Administration has implemented new tariffs of at least 10% on all goods entering the United States, with a potential 46% tariff specifically for goods made in Vietnam [1] Group 2 - The focus is on identifying innovative companies that contribute positively to society, referred to as "divergent stocks," which are characterized by strong fundamentals and long growth potential despite currently low prices [2] Group 3 - The article emphasizes that past performance does not guarantee future results and that no specific investment recommendations are provided [3]

Core Viewpoint - Amer Sports has experienced a significant stock price increase of approximately 187% since its public offering in February 2024, positioning it as a leading name in the consumer discretionary sector [1][2] Financial Performance - The company reported a strong Q1 earnings performance, with sales growth exceeding 23%, surpassing analyst expectations of just under 17% [3] - Adjusted diluted earnings per share (EPS) more than doubled from $0.11 to $0.27, significantly exceeding forecasts [4] - Amer Sports raised its full-year EPS guidance midpoint by over 4% and increased its revenue growth guidance from 14% to 16%, both ahead of analyst expectations [4] Brand and Market Position - Amer Sports' success is largely attributed to its key brand, Arc'teryx, known for high-end outdoor clothing, particularly lightweight waterproof jackets priced between $400 and $900 [6] - The technical apparel segment, which includes Arc'teryx, saw the fastest revenue growth at 28%, contributing 45% to total revenue [7] - Sales in Greater China grew by 43%, accounting for around 25% of total revenue, while the U.S. market contributed 26% with a 12% growth rate [7][8] Direct-to-Consumer Strategy - The company's direct-to-consumer (DTC) sales grew by 39%, significantly outpacing the 12% growth in its wholesale channel, indicating a positive trend for higher margins [8] Segment Performance - The Outdoor Performance segment, which includes Salomon footwear and apparel, saw its growth rate nearly double to 25%, making up 34% of total revenue [9] - Salomon generated $1 billion in revenue in 2024, capturing less than 1% of the global $180 billion sneaker market, with plans for further product launches [10] Valuation and Analyst Ratings - Analysts have raised their price targets for Amer Sports, with an average target just under $41, indicating a potential upside of 6% from recent closing prices [11] - The stock's price-to-earnings ratio stands at nearly 49x, significantly above the industry average of 29x, reflecting its strong earnings and sales growth profile [12] Future Outlook - The company is viewed as having high growth potential, particularly in the footwear segment, but expectations for continued outperformance will need to be managed [13]

Core Viewpoint - On Holding is responding to tariffs by increasing prices, which is expected to maintain profit levels [1] Company Response - The company has announced a price increase as a strategy to counteract the impact of tariffs [1] - This approach is noted as unique compared to other companies facing similar challenges [1] Financial Implications - The price increase is anticipated to keep profits stable despite the external pressures from tariffs [1]

Group 1 - On Holding AG reported a 43% year-on-year increase in sales for Q1 2025, reaching 727 million Swiss francs, with a gross margin increase from 59.7% to 59.9% [1] - Net profit decreased by 38% year-on-year to 56.7 million Swiss francs [1] - The brand's multi-channel strategy contributed to sales exceeding expectations, with direct-to-consumer (DTC) sales at 276.9 million Swiss francs and wholesale sales at 449.7 million Swiss francs [1] Group 2 - The Americas remained the largest contributor to sales, with a 32.7% year-on-year increase to 437 million Swiss francs, although the sales proportion decreased by 4.7 percentage points to 60.2% [1] - Approximately 90% and 10% of footwear products are produced in Vietnam and Indonesia, respectively, while 65% of apparel and accessories are produced in Vietnam [1] - Sales in the U.S. accounted for 55% and 59% of total sales in Q1 2025 and Q1 2024, respectively [1] Group 3 - Sales in Europe, the Middle East, and Africa grew by 33.6% year-on-year to 169 million Swiss francs, representing about 23.2% of total sales [2] - The Asia-Pacific region saw a significant growth of 130.1% year-on-year, reaching 121 million Swiss francs, with a sales proportion increase of 6.3 percentage points to 16.6% [2] - China and Japan were highlighted as key markets driving strong sales growth, with On planning to exceed 100 stores in China by 2026 [2]

Group 1 - On Holding AG (NYSE: ONON) reported a strong first quarter with sales increasing by 40% in constant currency [1] - The weaker USD contributed positively, resulting in reported sales growth of 43% [1]

Core Insights - The global sports brand industry is facing multiple pressures including economic slowdown, tariff impacts, rising costs, and weak consumer demand [2] - Under Armour reported a 9% decline in annual sales to $5.2 billion for the fiscal year ending March 31, 2025, with a net loss of $201 million [4][5] - On, a rising brand, experienced a 38% drop in net profit for Q1 2025 despite a 43% increase in sales, indicating challenges in maintaining profitability amid expansion costs [7][9] Under Armour - Under Armour's Q4 revenue fell 11% to $1.2 billion, but gross margin improved by 1.7 percentage points to 46.7% [4] - The company is focusing on full-price sales, reducing promotions, optimizing inventory, and implementing layoffs to enhance profitability and brand positioning [5] - North American revenue decreased by 11% to $3.1 billion, while international revenue fell by 6% to $2.1 billion, with the Asia-Pacific region down 13% to $755 million [5] On - On's Q1 2025 sales surged by 43% to 726.6 million Swiss francs, but net profit dropped by 38% to 56.7 million Swiss francs, resulting in a net profit margin of 7.8% [7] - The brand plans to increase prices in the U.S. market starting July, with potential expansion of this strategy to other markets next year [7] - The Asia-Pacific market saw a remarkable 130.1% increase in sales, becoming a key growth driver for the brand [7] Puma - Puma's Q1 2025 net profit plummeted by 64%, with sales growth of only 0.1% to €2.076 billion [10][12] - The company reported a significant drop in EBIT, down 63.7% to €57.7 million, while maintaining its sales and profit guidance for the fiscal year [12][13] - Puma is implementing cost efficiency plans and plans to cut 500 jobs globally by the end of Q2 [13] Adidas - Adidas reported a strong Q1 2025 with a 13% increase in sales to €6.15 billion, achieving a record high for the quarter [17] - The company’s operating profit surged by 82% to €610 million, driven by strong sales of retro shoe models [17] - Despite the strong performance, Adidas remains cautious about long-term goals due to geopolitical uncertainties and changing consumer sentiments [17]

Core Viewpoint - ON Holdings' stock price surged by over 10% following the Q1 earnings release and 2025 guidance update, indicating a strong performance in the high-end retail sector and a potential price reversal for the stock [3][4]. Financial Performance - Q1 revenue increased by 43% year-over-year to approximately $862.9 million, driven by strong direct-to-consumer (DTC) and wholesale sales [7][9]. - Direct-to-consumer sales rose by 42.4%, while wholesale sales grew by 38.6%, showcasing robust performance across all operating segments and regions [7][8]. - The core business of shoes grew by 40.5%, with apparel and accessories seeing significant growth of 93% and 97% respectively [8]. Margin and Profitability - Gross margin improved due to enhanced efficiency and a favorable selling environment, although earnings were down compared to the previous year due to foreign exchange shifts [9]. - Despite the earnings contraction, the company maintains profitability, a healthy balance sheet, and rising equity [9]. Future Guidance - ON Holdings raised its growth forecast for Q2 from at least 27% to 28%, with potential for further increases later in the year [10]. - Executives expressed a cautious outlook on profit, anticipating expansion relative to Q1 results, with expectations of sustaining double-digit top-line growth through the end of the decade [11]. Market Sentiment and Analyst Ratings - The current 12-month stock price forecast is $58.18, indicating a 1.34% upside, with a consensus rating of Buy based on 23 analyst ratings [13]. - Short interest remains elevated at nearly 6%, but has decreased from its peak, suggesting potential for a short-covering rally [14]. - Analysts had previously reduced price targets, but sentiment may shift positively following the earnings results, potentially leading to new all-time highs [15].

Group 1 - The U.S.-China trade negotiations have positively impacted the markets, leading to a sharp rally as if tariffs were never announced, with the S&P 500 now in flat territory for the year [1] - Valuation multiples in the market are currently very stretched despite the ongoing presence of economic uncertainties [1] Group 2 - Gary Alexander has extensive experience in covering technology companies and has been involved with seed-round startups, providing insights into current industry themes [1] - He has been a contributor to Seeking Alpha since 2017 and has been quoted in various web publications, with his articles reaching popular trading apps like Robinhood [1]

Core Insights - The sports footwear and apparel industry demonstrates resilience amid a sluggish global economic recovery and differentiated consumer demand, outperforming other sectors [1][2] - The analysis includes 19 brands/groups, primarily publicly listed companies, with revenue data for the 2024 calendar year, adjusted for fiscal year discrepancies and currency fluctuations [1][2] Global Market Overview - Total global revenue for the 18 brands/groups in 2024 is approximately $183.61 billion, reflecting a 3.78% increase from 2023 [8] - Nike and Adidas remain the dominant players, while Lululemon has surged to third place, surpassing Puma and VF Corporation [6][7] - The industry structure remains stable, with a leading tier of Nike and Adidas, followed by a growing middle tier including Decathlon, Anta, VF, and Lululemon [7][8] Chinese Market Insights - The total revenue for the Chinese market is estimated at around $37 billion for 2024, with an 8.8% year-over-year growth, outpacing global growth [14] - Anta Group leads the Chinese market, with significant contributions from its multi-brand strategy, while Nike retains the top position for single-brand revenue [14][15] - The competitive landscape in China features intense rivalry among brands like Anta, Li Ning, Adidas, and FILA, with Puma also showing growth [14][15] Growth Drivers - Running remains the highest growth segment in the sports footwear and apparel industry, with brands like HOKA and On experiencing significant revenue increases [15][16] - Outdoor brands, particularly those appealing to the middle class, are also thriving, driven by a shift in consumer identity and preferences [16] Future Considerations - The industry faces challenges related to brand positioning in either stock or incremental competition, necessitating strategic decisions on growth potential and market dynamics [17] - Established brands are undergoing transformations while new entrants must navigate consumer expectations and market integration [17]

Financial Data and Key Metrics Changes - Net sales reached CHF 726.6 million in Q1 2025, reflecting a year-over-year growth of 43% on a reported basis and 40% on a constant currency basis, marking the highest quarterly net sales in the company's history [27][39] - Gross profit margin increased to 59.9%, up from 59.7% in Q1 2024, driven by an increased direct-to-consumer (DTC) share [39] - Adjusted EBITDA margin for Q1 was 16.5%, up from 15.2% in the same period last year [39] - Net income reached CHF 56.7 million despite a sizable unrealized foreign exchange loss [40] Business Line Data and Key Metrics Changes - DTC channel net sales grew by 45.3% year-over-year, reaching CHF 276.9 million, with DTC share increasing to 38.1% from 37.5% [27][28] - Wholesale sales grew by 41.5% year-over-year, reaching CHF 449.7 million [29] - Apparel net sales reached CHF 38.1 million, increasing by 93.1% year-over-year, marking the highest quarterly net sales in history for this category [37] Market Data and Key Metrics Changes - Europe, Middle East, and Africa (EMEA) region grew by 33.6% on a reported basis, reaching CHF 168.6 million [30] - The Americas region saw net sales grow by 32.7% year-over-year to CHF 437.4 million [31] - Asia Pacific region experienced significant growth of 130.1% on a reported basis, reaching CHF 120.6 million [32] Company Strategy and Development Direction - The company is committed to maintaining its premium brand positioning and product promise, which is seen as a key differentiator in the market [10] - Focus on continuous product innovation and strategic partnerships to enhance brand awareness and cultural relevance [11][13] - Plans to expand retail presence while maintaining a controlled pace of store openings, aiming for a 10% revenue share from stores [87] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the brand's strength and consumer demand, despite macroeconomic uncertainties and potential tariff impacts [42][43] - The company has increased its constant currency growth rate outlook for 2025 to at least 28% [44] - Management emphasized the importance of operational efficiencies and strategic investments to drive long-term sustainable growth [47] Other Important Information - The company announced a leadership transition, with Martin Hoffmann set to become the sole CEO from July 1 [18][21] - The company has been recognized as the most innovative company in the design category by Fast Company for its LightSpray technology [15] Q&A Session Summary Question: Brand awareness and growth drivers in the Americas - Management highlighted that brand campaigns have significantly increased brand awareness, with strong growth continuing into April [51][52] Question: Improved constant currency growth outlook - Management confirmed that the outlook reflects strong growth across all regions and channels, with e-commerce and retail driving significant growth [62][66] Question: Mitigation efforts for tariff impacts - Management stated that the outlook assumes current tariffs and emphasized the brand's ability to increase prices to mitigate impacts [71][73] Question: Success of the apparel offering - Management noted that harmonized sizing and targeted campaigns have driven success in apparel, with strong performance in running, training, and tennis categories [78][80] Question: Store rollout performance - Management reported that 18 out of 20 stores outside China exceeded expectations, contributing positively to the brand's premium positioning [84][86] Question: Wholesale channel growth outlook - Management confirmed that the outlook for wholesale growth remains unchanged, with a focus on controlled expansion and maintaining inventory clarity [106][108]