A rise in underlying sales of outdoor apparel helped Amer Sports to slightly raise the turnover of its outdoor division for the third quarter, while sluggishness in the American wholesale market led to declining sales in ball sports and a flat turnover in fitness products.
The turnover of the Finnish group's outdoor division, which comprises the Salomon and Arc'teryx brands, inched up by 1 percent to €509.1 million for the quarter. It amounted to an increase of 3 percent in constant currencies, as own retail sales made up for lackluster demand in the U.S. wholesale market.
The outdoor division's sales advanced by 2 percent in constant currencies in Europe, the Middle East and Africa (EMEA), while they moved up by 1 percent in the Americas and jumped by 9 percent in Asia-Pacific. Its operating profit (Ebit) margin before one-off items contracted by 0.2 percentage points to 20.7 percent.
The Arc'teryx brand fueled an increase of 7 percent for apparel in constant currencies. This compared with a sales rise of just 2 percent for footwear, as wholesale customers remained reluctant to take inventory positions, relying on in-season orders instead. Amer said that footwear sales were further affected by the consolidation of global distribution, and volatility in Latin America.
When it comes to hardware, sales of winter sports equipment from brands including Salomon and Atomic moved up by 3 in constant currencies. Pre-orders for the second half were up by 5 percent, as the group already said in the summer. The cycling division around the Mavic brand saw its underlying sales tumble by 7 percent, due to high inventories of OEM products and retail inventories. Sales of sports instruments under the Suunto brand slipped by 3 percent but the group pointed to robust demand for its latest range of Spartan products.
The whole Amer group reported sales of €733.2 million for the three months, which was flat in reported terms and up by 3 percent in constant currencies. Its sales were up by 4 percent in EMEA and by 7 percent in Asia-Pacific, while they slipped by 1 percent in the Americas, all in constant currencies.
The weak U.S. wholesale market affected the group's team sports business, while its individual ball sports business was supported by the regained impetus in the tennis market. The combination led to a sales drop of 5 percent to €139.6 million in the Amer group's ball sports division for the quarter. The fitness division raised its sales in EMEA and Asia-Pacific but underperformed in the Americas, leading to a flat turnover in reported terms.
The Amer group's gross margin for the three months dropped by 1.3 percentage points to 46.7 percent. Its operating profit amounted to €109.0 million, up from €106.5 million, before one-off items of €34.3 million relating to the ongoing restructuring measures announced in February.
Heikki Takala, the group's chief executive, said that the sales growth was broad-based and aligned with the company's strategy of focusing on apparel, own retail sales, online sales and China. Takala added that Amer has been moving ahead with the restructuring measures outlined earlier this year to take more advantage of digital transformation, and that it started delivering cost efficiencies ahead of schedule. The company has also been driving cash flow improvements ahead of its target.
For the first nine months of this year, the group's sales were up by 2 percent in constant currencies, with increases in outdoor and fitness sales, but a small dip in the ball sports division. The group's turnover amounted to €1,882.1 million, up by 2 in reported terms. The gross margin in the three quarters was down by 1.3 percentage points to 45.6 percent and operating profit was down to €122.4 million, from €140.4 million – and that was before one-off items of about €40.0 million for restructuring measures.
The gross margin in the three quarters was down by 1.3 percentage points to 45.6 percent and EBIT shrank by 12.8 percent to €122.4 million – and that was before one-off items of about €40.0 million for restructuring measures.
The Finnish group's guidance remains unchanged, as it predicts sales in constant currencies to increase for the full year, in spite of short-term market sluggishness and with growth biased toward the second half of the year. Operating profit before one-off items should be at about the same level as in 2016.
Separately, the group announced that it would start repurchasing its own shares at the earliest on October 30 and at the latest on March 7, 2018. The shares will be repurchased otherwise than in proportion to the holdings of shareholders, by acquiring non-restricted equity on Nasdaq Helsinki, at the price prevailing at the time of the acquisition. The board already obtained an authorization from shareholders in March this year to repurchase up to 10 million Amer shares.
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