Arc'teryx and Salomon both delivered double-digit sales rises for apparel in the first quarter of this year. They contributed to a sales increase of 10 percent to €635.5 million for their Finnish owner, the Amer Sports group, with a broad-based sales hike of 11 percent in constant currencies and an organic sales rise of 6 percent.
The Amer group's entire outdoor category raised its sales by 10 percent to €374.4 million, which was an increase of 11 percent in constant currencies. The sharpest sales rise for the outdoor division came from Asia-Pacific, where sales climbed by 27 percent in constant currencies, while they were up by 21 percent in the Americas and 4 percent in Europe, the Middle East and Africa (EMEA).
Amer's management said in a conference call with analysts that the division's growth was driven by the Arc'teryx brand. Outdoor apparel sales climbed by 14 percent to €104.5 million, with a rise of 19 percent in constant currencies. Footwear sales moved up by 15 percent to €152.5 million, with particularly strong growth in the Americas.
The sale rise for Salomon's outdoor products comes after another buoyant year for the French brand, which is the largest in the Amer Sports group. The French company's sales moved up by 8 percent to €827 million in 2015, compared with about €400 million in 2007. Jean-Marc Pambet, president of Salomon and Amer Sports footwear, said in a statement that Salomon aimed to reach at least €1 billion in sales by 2020.
The U.S. became Salomon's largest market last year. Nearly 25 percent of the group's sales came from the Americas, compared with 10 percent in Asia and the remainder mostly in Europe.
Salomon's winter sports equipment sales were stable last year but it raised its turnover by 11 percent in outdoor apparel and footwear, which made up about 70 percent of the brand's sales last year. Pambet told Sport-Guide, a French internet publication, that the growth potential remains strong for the trail running category and that Salomon is preparing to move into the road running market, launching new functional products in 2017 and giving itself three to four years to establish itself in this category.
The Salomon brand is running a campaign this year with a new payoff, Time to Play, encouraging consumers to take a break from their stressful lives to enjoy time in the outdoors. It comes with a new visual identity, which was unveiled at Ispo in Munich.
Amer's management is projecting robust expansion for its outdoor business in the balance of 2016 but added that the performance in the quarter may not be extrapolated for the whole year, due to left-over winter inventories that may put some pressure on orders for the second half.
With increased sales and gross margin, the outdoor division managed a rise to €37.7 million from €21.4 million for the prior-year period in operating profit (Ebit) excluding items affecting comparability – a metric based on updated guidelines for alternative performance measures, excluding acquisitions and other factors that muddle comparisons.
Affected by unfavorable winter weather, the Amer Sports group's winter sports equipment sales, with Atomic, Salomon and other brands, dipped by 6 percent to €43.4 million for the quarter, and the decline was the same in constant currencies.
Another outdoor equipment category that performed weakly for Amer Sports in the quarter was cycling, with the Mavic brand, which saw its sales contract by 2 percent to €39.7 million. Sports instruments was the only outdoor equipment category that reported a sales increase for the group in the quarter, up by 13 percent to €34.3 million, owing to product launches that strengthened distribution.
Amer Sports' management said that the cycling business was turning around. The Finnish group reinforced it during the period with the acquisition of Enve Composites, a fast-growing brand of high-end carbon wheels, components and accessories for road and mountain biking with annual sales in the range of $30 million.
The group's ball sports division delivered a broad-based sales increase of 14 percent to €186.7 million and the same increase in constant currencies, but without the acquisition of Louisville Slugger the division's sales were up by 2 percent in constant currencies. Amer Sports said the division was in robust shape, due to the development of its digital platform, customization and own retail sales, among others things.
The individual ball sports division, with the Wilson brand, raised its turnover by just 1 percent to €89.2 million, while Louisville Slugger drove a sales rise of 29 percent to €97.5 million for team sports, which would have amounted to a broad-based rise of 4 percent without the buy and exchange rate changes.
Due to the Louisville acquisition, the sales rise for the ball sports division was strongest in the Americas. EMEA delivered a sales increase of 6 percent to €39.2 million, up by 7 percent in constant currencies, compared with a rise of 19 percent in the Americas and a dip of 2 percent in Asia-Pacific. The underlying operating profit for the division reached €19.0 million, up from €18.3 million.
The fitness division continued to expand with a sales increase of 6 percent to €74.4 million for the quarter, and the same rise in constant currencies. Sales shot up in Asia-Pacific and they improved by 4 percent in the Americas in constant currencies, while they declined by 2 percent in EMEA. Operating profit before one-off items shrank to €0.3 million, down from €1.3 million for the same quarter last year, which was attributed to factory startup costs.
The whole group's sales rise includes an increase of 34 percent in the group's own retail revenues, with online sales surging by 42 percent. Its gross margin firmed up by 1.5 percentage point to 47.4 percent. The group's operating profit (Ebit) before one-off items reached €46.0 million, compared with €33.6 million for the prior-year period.
The profit was affected by a write-down of €6.3 million in receivables from a U.S. sporting goods retailer – unnamed but most certainly The Sports Authority. The reported operating profit (Ebit) margin amounted to 6.2 percent, up by 0.6 percentage points, and net profit landed at €23.2 million, against €17.2 million.
The outlook for the full year remains unchanged, with sales in local currencies and the group's Ebit margin before one-off items both projected to increase. The company has given priority to five areas of development, from apparel and footwear to its business in the U.S. and China, business to consumer sales and digitally connected devices and services.