Amer Sports(US:AS)2025-05-20 13:02Financial Data and Key Metrics Changes - Amherst Sports reported a 23% sales growth in Q1 2025, or 26% when adjusted for currency fluctuations, with an adjusted operating margin increase of nearly 500 basis points [6][32] - Adjusted net income for Q1 was $148 million, compared to $50 million in the prior year, with adjusted diluted earnings per share rising to $0.27 from $0.11 [36][37] - Adjusted gross margin increased by 330 basis points to 58% in Q1, driven by favorable channel, geographic, and product mix [34] Business Line Data and Key Metrics Changes - Technical Apparel revenues increased by 28% to $664 million, led by Arcterix, with a direct-to-consumer (D2C) growth of 31% [37][38] - Outdoor Performance segment revenues rose by 25% to $502 million, driven by strong performance in Solomon's soft goods and winter sports equipment [39] - Ball and Racket segment revenue increased by 12% to $306 million, with notable growth in soft goods and racket sports [43] Market Data and Key Metrics Changes - Asia Pacific region saw a 49% growth, followed by a 43% increase in China, while EMEA and The Americas both grew by 12% [33] - D2C channel growth was particularly strong at 39%, led by Solomon Footwear in Greater China and APAC [32] Company Strategy and Development Direction - The company aims to optimize its retail footprint in Greater China, focusing on high-quality store locations rather than rapid expansion [12][13] - Amherst Sports is positioned to manage through macro uncertainties, leveraging its premium brands and pricing power [8][47] - The company plans to open approximately 25 net new Arcterix stores globally in 2025, maintaining a focus on quality over quantity [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating tariff uncertainties due to a clean balance sheet and strong brand portfolio [31][47] - The company raised its full-year revenue growth expectations from 13% to 15% to 17%, despite anticipated tariff impacts [48][53] - Management highlighted the strong demand for premium outdoor products, particularly in Asia and China, as a key growth driver [62] Other Important Information - The company experienced strong consumer engagement, with initiatives like the Achilles Academy driving significant media impressions and sales [15] - The footwear category is expected to become a significant growth avenue, with dedicated teams and P&L structures in place [17][19] Q&A Session Summary Question: Can you elaborate on the competitive advantages and momentum at Solomon? - Management highlighted the unique portfolio of brands and strong demand for premium products, particularly in the modern outdoor sneaker category [60][62] Question: Is the momentum observed in Solomon sustainable? - Management expressed confidence in the sustainability of growth, supported by strong D2C performance and expanding market presence [74][76] Question: What are the expectations for soft goods growth in the outdoor performance category? - Management indicated that soft goods could see significant growth, with a focus on margin accretion as the category expands [81][82] Question: How does the company plan to manage tariff impacts? - Management stated that the impact of tariffs on the P&L is expected to be negligible due to mitigation strategies already in place [46][88] Question: What is the strategy behind closing partner stores in China? - Management explained that closing partner stores to open larger format locations is aimed at enhancing ROI and improving brand presence [97]