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DATE
Tuesday, May 20, 2025 at 8 a.m. ET
CALL PARTICIPANTS
Chief Executive Officer — James Zheng
Chief Financial Officer — Andrew Page
Teric CEO — Stuart Haselden
Vice President, Investor Relations — Omar Saad
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TAKEAWAYS
Revenue Growth: Reported sales increased by 23% in Q1 FY2025, or 26% in constant currency, led by technical apparel and outdoor performance segments.
Adjusted Operating Margin: Adjusted operating margin expanded by 490 basis points to 15.8% from 10.9% versus the prior year period, driven by both gross margin expansion and SG&A leverage.
Direct-to-Consumer (D2C) Channel: D2C sales grew 39% in Q1, led by Salomon Footwear in Greater China and APAC, while Arc’teryx registered a 19% omni-channel comparable growth.
Regional Performance: Asia Pacific increased 49% in Q1 FY2025, China rose 43%, EMEA accelerated 12%, and the Americas grew 12%.
Adjusted Gross Margin: Adjusted gross margin increased 330 basis points to 58%, primarily due to favorable channel, geographic, and product mix, as well as lower discounts.
Segment Results — Technical Apparel: Revenues rose 28% to $664 million for Q1 FY2025 with a 23.8% adjusted operating margin, led by Arc’teryx and fueled by 31% D2C expansion.
Segment Results — Outdoor Performance: Revenues increased 25% to $502 million for Q1 FY2025, with D2C channel up 68% and adjusted operating profit margin up 990 basis points to 14.7%.
Segment Results — Ball and Racket: Revenues grew 12% to $306 million for Q1 FY2025; adjusted operating margin (non-GAAP) climbed 270 basis points to 6.6%.
Adjusted Net Income: Adjusted net income in Q1 was $148 million, up from $50 million in the comparable period (adjusted, Q1 FY2024).
Adjusted Diluted EPS: Adjusted diluted earnings per share was $0.27 in Q1, compared to $0.11 in the prior year period.
Balance Sheet Position: Ended Q1 FY2025 with $515 million in net debt, down from $591 million at the end of Q4; net debt to adjusted EBITDA was approximately 0.5x at quarter-end.
Operating Cash Flow: Generated $164 million of operating cash flow in Q1 FY2025, with inventory up 15% year over year, well below 23% sales growth.
Tariff Mitigation: CFO Page said, “The burden on our FY2025 P&L is negligible.” with current tariff levels and mitigation strategies implemented.
Full-Year Guidance Raised: Revenue growth outlook increased to 15%-17% (from 13%-15%) for FY2025, adjusted diluted EPS to $0.67-$0.72, and technical apparel revenue growth guidance to 20%-22%.
Segment Guidance: Adjusted operating margin targets for FY2025 remain at 21% (technical apparel), 9.5% adjusted operating margin (outdoor performance), and 3%-4% (ball and racket).
Q2 2025 Guidance: Expects reported revenue growth of 16%-18% for Q2 FY2025, adjusted gross margin of 57%-58%, adjusted operating profit between 3% and 4%, and adjusted diluted EPS of $0.00-$0.02.
Store Expansion: Plans to open approximately 25 net new Arc’teryx stores worldwide in FY2025; Salomon aiming for nearly 300 shops in Greater China, up from 218 at quarter-end.
Women’s Segment Growth: Arc’teryx women’s business grew 38% in Q1 FY2025, outperforming the rest of the brand in every region.
SUMMARY
With strong sales momentum in both technical apparel and outdoor performance segments and healthy regional performance led by Asia Pacific and China, management increased full-year revenue and earnings expectations for FY2025, stating existing tariff mitigation initiatives are expected to keep margin pressure minimal. Store expansion continues, particularly in Greater China and across key brands, while the women’s and footwear categories are emphasized as core pillars of the company’s ongoing strategy.
Management highlighted the Arc’teryx brand’s increasing traction, particularly in the direct-to-consumer channel and women’s category, emphasizing product and retail innovation.
Salomon’s sports style and performance footwear franchises were cited as high-growth drivers in Q1, with the company viewing its $1 billion in sneaker sales in 2024 as a small fraction of overall global opportunity.
Tariff risk was addressed directly, with CFO Page stating, “impact on tariffs based upon where tariffs stand today is negligible.” and describing multiple mitigation levers in place.
Ball and racket segment store growth was concentrated in Greater China in Q1, and profitability improvement is expected as the retail strategy matures and scales.
Management maintained a cautious outlook for the balance of the year, embedding potential macroeconomic uncertainty into second-half guidance.
Ongoing rebalancing in Greater China involves closing lower-performing Arc’teryx partner doors and consolidating retail in higher-quality, larger-format owned stores for sustained growth and increased productivity.
Wholesale momentum at Salomon in Europe is supported by successful strategic launches, with robust order books and retailer confidence heading into the second half.
INDUSTRY GLOSSARY
Omni comp: Comparable sales growth across both physical retail and e-commerce direct-to-consumer channels.
SG&A leverage: Operating expense control resulting in selling, general, and administrative costs growing at a slower rate than revenue, improving profitability.
ARPUs: Average Revenue Per User/store, an indicator of sales productivity at retail locations.
AOV: Average Order Value, the mean sales value per customer transaction.
ASPs: Average Selling Price, the mean price at which a product is sold.
ROU depreciation: Depreciation expense associated with Right-Of-Use assets under lease accounting standards.
Full Conference Call Transcript
Omar Saad: Thanks for joining Amer Sports, Inc.’s earnings call for the first quarter of fiscal year 2025. Earlier this morning, we announced our financial results for the quarter ended March 31, 2025, and the release can be found on our IR website, investors.amersports.com. A quick reminder to everyone that today’s call will contain forward-looking statements within the meaning of the federal securities laws. These forward-looking statements reflect our current expectations and beliefs only and are subject to certain risks and uncertainties that could cause actual results to differ materially. Please see the safe harbor statement in our earnings release and SEC filings. We will also discuss certain non-IFRS financial measures.
Please refer to our earnings release for important information regarding such non-IFRS financial measures, including reconciliations to the most comparable IFRS financial measures. We’ll begin with prepared remarks from our CEO James Zheng and CFO Andrew Page, followed by a Q&A session until approximately 9 AM Eastern. James will cover key operational and brand highlights, then Andrew will provide a financial review at both the group and segment level and also walk through our guidance for the second quarter and full year 2025. Our Teric CEO, Stuart Haselden, will also join for the Q&A session. With that, I’ll turn the call over to James.
James Zheng: Thanks, Omar. Amer Sports, Inc. began 2025 with a great performance in the first quarter, delivering sales, adjusted margin, and EPS well above expectations. We generated 23% sales growth or 26% ex-currency, and we also expanded our adjusted operating margin by nearly 500 basis points. Our performance was led by strong growth and profitability in both technical apparel and outdoor performance, as well as solid sales and margin results in ball and racket. In addition to the continued broad-based trends from our flagship brand Arc’teryx, I’d like to highlight the growing momentum behind the Salomon sneakers. We are really starting to see consumers all around the world respond to their unique performance and style attributes.
Furthermore, our market-leading hybrid equipment franchises delivered better-than-expected results for both winter sports equipment and the Wilson tennis racket. Although we are off to a great start in 2025, given macro uncertainty related to the US tariffs, we are operating our business with discipline and flexibility. Andrew will provide a more detailed discussion of our tariff exposure mitigation strategies and the financial impacts, but I’d like to emphasize that I believe we are very well positioned to manage through a wide range of tariff scenarios given our premium brands with pricing power, secular growth trends, and the relatively low US revenue exposure.
Looking year and the long term, we believe Amer Sports, Inc. is a uniquely positioned company within the global sports and outdoor space. Several factors give me confidence for the rest of this year and well beyond. First, we own and operate a unique portfolio of premium outdoor and sports brands. Each one is empowered by our technical innovation and is positioned at the pinnacle of its segment. Our brands have high conversion and satisfaction but are still small players with room to grow. Second, Arc’teryx is a breakout growth spire with great growth and profitability for the outdoor industry driven by its disruptive direct-to-consumer models and unique competitive position.
It’s still very underpenetrated globally and still has a tremendous long-term growth opportunity. Third, we believe Salomon sneakers have unique performance and design attributes, and the brand is experiencing accelerating momentum globally but still has a small market share of the global sneaker market. Fourth, Wilson and our winter sports equipment brand have authentic heritage, premium positioning, higher performance products, and leading market positions. These high market share brands will deliver slower long-term growth in their core equipment business, but they still have large soft goods potential, especially Wilson Tennis 360. And fifth, we believe we have a very strong differentiated platform in Greater China where we continue to deliver best-in-class performance with great momentum across all three big brands.
Before I turn over to Andrew, allow me to briefly recap key brand highlights from our three segments. Starting with technical apparel, which is led by our fastest-growing and largest brand, Arc’teryx. Arc’teryx delivered another great quarter with strong growth across all regions, channels, and categories, especially footwear and women’s, which continue to grow faster than the brand overall. We are encouraged to see the technical apparel momentum continue in the direct-to-consumer channel where we generated plus 19% omni-channel in quarter one. Importantly, our direct-to-consumer growth was driven by strong performance in both stores and online.
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