The acquisition of Peak Performance and robust sales of winter sports equipment have driven another sales rise for the Amer Sports group in the third quarter,.
The Finnish company has set in motion the sale of its cycling business, but has declined last week to provide any updates on a potential takeover bid from a Chinese consortium led by Anta Sports Products.
Amer raised its turnover by 8 percent to €757.2 million for the quarter, up by 9 percent in constant currencies. Its gross margin narrowed by 0.3 percentage points to 46.2 percent, but its earnings before interest and tax excluding one-off items jumped by 12.6 percent to €116.9 million and it ended the quarter with net profit of €73.6 million, up from €47.0 million in the year-ago period.
The outdoor division alone saw its sales jump by 11 percent to €522.0 million, an increase of 12 percent in constant currencies. Much of that could be attributed to the acquisition of Peak Performance, which slightly raised its turnover on a pro forma basis and added about €40 million for the Amer Sports group in the quarter. It helped to lift outdoor apparel sales by 29 percent to €196.9 million for the three months.
But the outdoor division's turnover was up by just 3 percent in organic terms, as some of the Arc'teryx brand's sales shifted to the fourth quarter. Its sales were up by 7 percent in the third quarter, with the strongest demand coming from China. The buoyant start to the fourth quarter has encouraged Amer Sports to project double-digit growth for the brand in the full year.
With brands such as Atomic and Salomon, winter sports equipment sales were up by 8 percent to €143.4 million, and the uptick was spread across all product categories. Amer group provided a separate update indicating that Atomic had come out of a buoyant winter season, with double-digit sales increases in all product categories and all regions. The profitability of the winter sports equipment division has also been supported by more automation in ski production and technological improvements such as the implementation of 3D scanning, thermography and robotics.
Built around the Suunto brand, the sports instruments division raised its turnover by 15 percent to €43.2 million for the quarter, thanks to a wider product range and expanded distribution.
The only outdoor category that underperformed was footwear, Amer Sports continued to clean up its distribution in the category. Heikki Takala, the Amer group's chief executive, made it clear in a conference call with analysts last week that these adjustments chiefly impacted footwear sales in Europe, the Middle East and Africa (EMEA), while footwear sales were up at a high-single-digit rate in the U.S. and Japan. He added that the situation should improve next year, and particularly in the second half, as a wider range of products will enable the group to deploy a more targeted footwear distribution strategy.
The acquisition of Peak Performance mostly pushed up the outdoor division's sales in EMEA, which were up by 18 percent in constant currencies. On the same basis, China and Japan contributed most strongly to a sales hike of 15 percent in Asia-Pacific, while sales crept up by just 1 percent in the Americas. The outdoor division's gross margin slipped, but it still raised its operating profit margin excluding one-off items by 0.4 percentage points to 21.7 percent.
The numbers reported for the outdoor division no longer include cycling with the Mavic and Enve brands, because Amer has resolved to divest them..
With the Wilson and Louisville Slugger brands, among others, the ball sports division managed a sales increase of 4 percent to €147.2 million for the three months.
The fitness division, which mostly consists of the Precor brand, reported almost flat sales of €88.0 million for the quarter, which Takala found a little disappointing, but said that the group continued to project robust growth for the division in the full year.
The entire group's direct to consumer sales were up by 17 percent, with a rise of 13 percent for its retail business, which was up by 7 percent in comparable store sales, and a jump of 23 percent for e-commerce. Among other priority areas, sales climbed by 20 percent in China, and Takala said that the group is returning to single-digit growth in the U.S. market.
For the first nine months of this year, the group's sales moved up by 1 percent to €1,804.0 million. This was an increase of 5 percent in constant currencies, driven by a sales hike of 8 percent for the outdoor division, while underlying sales were up by just 1 percent for both the ball sports and fitness divisions. The group's operating profit excluding one-off items for the nine months was €134.5 million, up from €116.3 million. Amer reiterated its guidance that sales in constant currencies and operating profit without one-off items should increase for the full year.
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