Fashnopsis:
- Amer Sports rockets 13% in Q1, driven by a 44% surge in technical apparel sales.
- Brand-direct model thrives with 41% DTC sales growth, all regions contributing.
- Arc’teryx leads the charge with double-digit new stores & strong omnichannel growth.
- Amer Sports forecasts mid-teens revenue growth for 2024, raises EPS guidance.
- Technical apparel to remain a powerhouse with projected 25% growth and 20%+ operating margin.
Amer Sports reported a strong first quarter of 2024, exceeding expectations with a 13% increase in revenue to $1.2 billion. This growth was fueled by a surge in the technical apparel segment, which saw a remarkable 44% increase. On a constant currency basis, revenue climbed an impressive 14%.
Brand-Direct Model Fuels Growth
Amer Sports CEO James Zheng credits the company’s successful transformation to a brand-direct business model, implemented four years ago, for driving this profitable growth. This strategy allows them to connect directly with consumers, fostering brand loyalty and offering a seamless buying experience.
Technical Apparel Leads the Charge
The technical apparel segment emerged as the star performer, led by the exceptional performance of Arc’teryx. This brand boasts double-digit new store growth and impressive omnichannel growth, exceeding even the strong results from Q1 2023. Notably, Arc’teryx is experiencing broad-based regional growth, with Asia Pacific and the Americas leading the way, followed by Greater China and EMEA (Europe, Middle East, and Africa).
DTC Sales Boom, Wholesale Remains Steady
Amer Sports witnessed a significant 41% expansion in direct-to-consumer (DTC) sales, with all regions contributing to this double-digit growth. Wholesale revenues remained stable year-over-year, showing a decrease of only 1%. Regionally, Greater China led the pack with a 51% increase, followed by the Asia Pacific region at 34%. While EMEA displayed modest growth of 1%, revenue in the Americas remained flat. This was due to growth in the technical apparel segment being offset by declines in the ball & racquet and outdoor performance categories within the Americas.
Profitability and Guidance
Despite a reported net income decline to $7 million and diluted earnings per share of 1 cent for Q1 2024, Amer Sports’ adjusted gross profit margin rose to 54.3%, reflecting strong financial performance. Adjusted net income reached $39 million, or 8 cents per share on a fully diluted basis.
Looking ahead, Amer Sports forecasts mid-teens revenue growth for the full year 2024. They anticipate a gross margin of approximately 54%, with an operating margin ranging from 10.5% to 11%. The company also raised its EPS guidance to the high end of the previously stated range of 30 cents to 40 cents.
Segment-Specific Growth Projections
Amer Sports expects the technical apparel segment to be a major driver of growth, with a projected 25% revenue increase and an operating margin exceeding 20%. The outdoor performance category is also poised for growth in the mid-to-high-single-digit range, with an operating margin in the high-single-digit percentage range. The ball & racquet segment is expected to show low-to-mid single-digit growth in both revenue and operating margin. For the second quarter, Amer Sports anticipates a reported revenue increase of approximately 10%, with a gross margin of around 54% and diluted EPS ranging from negative 4 cents to negative 8 cents.
Image Source: Amer Sports
