Shares of Amer Sports, the maker of Wilson tennis rackets and Lousiville Slugger baseball bats, fell about 9% Tuesday after the company reported strong sales in China but a slowdown in wholesale orders.
Here’s how the newly public athletic company did in its fourth fiscal quarter. CNBC didn’t compare the results to Wall Street estimates because it’s the first earnings report since Amer Sports went public.
- Loss per share: 25 cents
- Revenue: $1.32 billion
In the three months ended December 31, the company reported a net loss of $94.9 million, or 25 cents per share, compared with $148.3 million, or 39 cents per share, a year earlier.
Sales rose to $1.32 billion, up about 10% from $1.2 billion a year earlier.
Shares fell more than 2% in pre-market trading.
Amer, which also owns Arc’teryx, Salomon and a number of other athletic equipment and apparel brands, operates in three distinct business segments. They are technical apparel, which includes its pricey Arc’teryx winter jackets; outdoor performance, such as Salomon’s winter sports equipment; and ball and racquet sports, which includes equipment and apparel from Wilson and Louisville, among others.
The company started trading on the New York Stock Exchange last month under the ticker “AS.” Shares rose just 3% in Amer’s debut on the public markets after it priced its IPO at a discount. Sellers showed muted interest in the stock during its first day of trading over concerns about its connections and exposure to China and its debt-laden balance sheet.
Founded in Helsinki in 1950, Amer was a Finnish public company until it was taken private in 2019 by a consortium of investors led by China’s ANTA Sports, FountainVest Partners, Anamered Investments and Tencent.
Since the acquisition, sales grew about 45% from $2.45 billion in 2020 to $3.55 billion in 2022. Revenue jumped again in 2023 to $4.37 billion, the company said Tuesday.
Still, Amer failed to turn a profit between 2020 and 2023. In fiscal 2023, the company lost $208.8 million, but its losses narrowed from $230.9 million in fiscal 2022.
In a statement on Tuesday, Amer’s CEO James Zheng said the company is still in the “early stages” of its “profitable growth journey.”
“We are winning in the premium segment of the sports and outdoor market, which remains healthy and growing. Driven by our technical performance products, we believe Amer Sports’ brands resonate strongly with consumers everywhere, but are still relatively small players on the global stage,” said Zheng. “Looking forward, our confidence is enhanced by the fact that our highest margin brand, region, channel, and category are growing fastest.”
Much of its expansion has come in China. Between 2020 and 2022, Amer grew sales in the region from 8.3% of total revenue to 14.8%. In the nine months ended Sept. 30, nearly 20% of sales came from the region. But the growth also came during a time when China was reopening from the Covid pandemic and some retailers saw large spikes in demand that may not be sustained over time.
That growth story continued during Amer’s fiscal fourth quarter. Sales in Greater China jumped by 45% and all three of the company’s segments saw “solid growth.”
Amer’s supply chain is also heavily exposed to the region. The majority of its products are sourced from suppliers “predominantly” in the Asia Pacific region, including China, according to a securities filing.
Amer says it’s a global company with a diverse reach across a myriad of geographies, but those regions are growing at an uneven pace. In 2023, sales in Europe, the Middle East and Africa represented about 33% of total revenue, down from 36% in 2022. North America made up about 39.5% of sales in 2023, down from 42.4% of sales in 2022.
Conversely, China represented about 19% of sales in 2023, compared to 14.8% in 2022. Sales in Amer’s APAC region represented 8% of total revenue in 2023, up from 7% in 2022.
During the fourth quarter, sales in APAC grew by 22% and in North America, revenue only increased by a mid-single digit percentage. Strength in Amer’s direct channels lifted sales in the region, but that boost was offset by a slowdown in wholesale revenue.
For its fiscal first quarter, Amer expects reported revenue to grow between 6% and 8%, and it expects its adjusted gross margin to be around 53.5%. It anticipates earnings to range between a loss per share of 1 cent to earnings per share of 2 cents.
The company expects technical apparel revenue to grow about 30%, sales for its outdoor performance categories to be flat year over year and its ball and racquet segment sales to be down a double digit percentage.
For the full year, Amer expects sales to grow by a mid-teens percentage, and it anticipates an adjusted gross margin of between 53.5% and 54%. It is forecasting earnings per share between 30 cents and 40 cents.
Read the full earnings release here.
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