Is Amer Sports betting too heavily on Asia? The latest earnings report reveals a surge in growth, but a closer look suggests a potential imbalance that could raise eyebrows. Let’s dive into the details and see what’s driving these numbers.
Amer Sports, the powerhouse behind brands like Arc’teryx, Peak Performance, Salomon, Atomic, Armada, Louisville Slugger, Atec, Evoshield, and Wilson Sports, recently announced impressive results for the third quarter of 2025. CEO James Zheng proudly stated that their portfolio of “premium technical brands” is successfully carving out new opportunities and expanding market share globally. He specifically highlighted the exceptional growth of Salomon footwear, the re-acceleration of Arc’teryx’s omni-channel performance, and the solid performance of Wilson Tennis 360 and their Winter Sports Equipment lines. Zheng emphasized that their specialized and highly technical brands are strategically positioned within the premium sports and outdoor market, which he believes remains a robust segment of the global consumer landscape.
The numbers speak for themselves: third-quarter revenue soared by 30 percent year-over-year, reaching $1.76 billion. On a constant-currency basis, the growth was still a substantial 28 percent. But here’s where it gets controversial… the geographical breakdown reveals a story that might not be entirely rosy for everyone.
The Eastward Tilt: A Cause for Concern?
The growth engine for Amer Sports is undeniably fueled by Greater China (including Mainland China, Hong Kong, Macau, and Taiwan) and the broader Asia Pacific region (excluding Greater China). While an 18 percent growth rate in the Americas seems attractive in the current market, the significant disparity between the growth rates in the Americas compared to Greater China and Asia Pacific is something to consider. Is Amer Sports becoming too reliant on Asian markets? This is a crucial question for investors and anyone interested in the long-term sustainability of the company’s growth. Some might argue that focusing on high-growth areas is simply smart business, while others might worry about overexposure to a single region and the potential risks associated with it. What do you think?
Despite these regional imbalances, Wall Street seems optimistic, with the company’s stock jumping 9.45 percent on Tuesday, November 18th. This suggests that investors are primarily focused on the overall growth figures and profitability, at least for now.
Segment Performance: A Deeper Dive
Let’s break down the performance of each segment to understand where the growth is truly coming from:
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Technical Apparel (Arc’teryx, Peak Performance): This segment saw a revenue increase of 31 percent (32 percent on a constant-currency basis), reaching $683 million. Arc’teryx led the charge, with omni-comp growth (more on what that means later) of 27 percent year-over-year. A significant driver was a 46 percent expansion in direct-to-consumer (DTC) sales, while wholesale channel sales improved by 11 percent. The segment reported strong growth across all geographies, with APAC, the Americas, Greater China, and EMEA all contributing. Interestingly, the acquisition of the brand’s Korea partner had a negligible impact on the quarter, but is expected to generate approximately $120 million in total retail sales annually starting in 2025. The adjusted operating margin for this segment, however, declined slightly by 100 basis points to 19.0 percent, primarily due to a timing shift related to government grants. Arc’teryx plans to open approximately 25 net new stores in 2025, excluding the Korea acquisition.
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Outdoor Performance (Salomon Footwear, Salomon Winter Sports Equipment, Atomic, Armada): This segment experienced a robust 36 percent revenue increase (32 percent on a constant-currency basis), reaching $724 million. Salomon Footwear was a major contributor, along with strong growth in Salomon Softgoods. DTC revenue skyrocketed by 67 percent, fueled by APAC and Greater China, while wholesale growth accelerated to 26 percent. Geographically, Greater China and APAC led the way, followed by accelerating growth in EMEA and the Americas. The segment’s adjusted operating margin expanded significantly by 420 basis points to 21.7 percent, driven by strong gross margin expansion. Salomon opened 29 net new brand stores in the third quarter, primarily in Greater China, Korea, and Japan, signaling a strategic focus on these markets.
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Ball & Racquet Sports (Louisville Slugger, Atec, Evoshield, Wilson Sports): This segment saw a more modest 16 percent revenue increase, reaching $350 million. Growth was driven by strong performance in Softgoods and Racquet Sports. While Racquet Sports, particularly Tennis 360, continued to thrive, solid trends in Golf were offset by softer sales in Baseball and Inflatables. China led the regional growth, followed by APAC, EMEA, and slight growth in the Americas. The segment’s adjusted operating margin grew by 70 basis points to 7.6 percent, thanks to strong gains in gross margin. Wilson opened 10 net new brand stores in Q3, mostly in Greater China, further emphasizing the importance of this region.
Omni-Comp Explained
Amer Sports uses the term “omni-comp” to measure the year-over-year revenue growth from their owned-retail stores and e-commerce sites that have been open for at least 13 months. This metric excludes remodeled stores that have undergone significant changes (more than 20 percent change in square footage or closed for more than 60 days) for a period of 13 months after the renovation. This provides a more accurate picture of organic growth by isolating the performance of existing locations.
Financial Highlights
- Gross margin increased to 56.8 percent (57.9 percent adjusted).
- Operating profit increased to $216 million ($275 million adjusted).
- Net income attributable to equity holders increased significantly to $143 million, or 25 cents per diluted share ($185 million, or 33 cents adjusted diluted earnings per share).
- Net debt at quarter-end was $800 million, with $353 million in cash and cash equivalents.
- Inventory levels increased by 28 percent to $1.71 billion, but this growth was outpaced by strong sales growth.
Looking Ahead: Upward Revisions and Optimistic Projections
Amer Sports CFO Andrew Page highlighted that Salomon footwear is emerging as a strong second pillar of profitable growth alongside Arc’teryx, enhancing the company’s financial profile and long-term value creation potential. Due to continued momentum, Amer Sports is raising its full-year revenue, margin, and EPS expectations. The company anticipates delivering 2026 Group revenue growth towards the high end of their long-term target of low-double-digit to mid-teens annual sales growth. They also expect to achieve adjusted operating margin expansion within their long-term goal of 30-70+ basis points annually.
Updated Guidance for 2025
- Reported revenue growth: 23 percent – 24 percent
- Gross margin: approximately 58 percent
- Operating margin: 12.5 percent – 12.7 percent
- Fully diluted EPS: $0.88 – 0.92
Segment-Specific Outlooks:
- Technical Apparel (Arc’teryx): Revenue growth of 26 percent – 27 percent; Segment operating margin approximately 21 percent.
- Outdoor Performance (Salomon): Revenue growth of 28 percent – 29 percent; Segment operating margin 13 percent – 13.5 percent.
- Ball & Racquet (Wilson Sports): Revenue growth of 10 percent – 11 percent; Segment operating margin of 3 percent – 4 percent.
The Big Question: Is Asia the Key to Amer Sports’ Future?
The numbers are undeniable: Asia, particularly Greater China, is driving a significant portion of Amer Sports’ growth. While this presents exciting opportunities, it also raises questions about the company’s long-term strategy and potential risks. Are they diversifying enough, or are they putting too many eggs in one basket? What happens if economic conditions in Asia change? And this is the part most people miss… what about the cultural nuances and changing consumer preferences in these markets? Can Amer Sports adapt quickly enough to stay ahead of the curve?
What are your thoughts? Is Amer Sports’ focus on Asia a brilliant move, or a potential vulnerability? Share your opinions and insights in the comments below!