Financial Report 2024 丨 Amer Sports turns losses in the first half of the year, plans to expand the Chinese DTC model globally

The global sportswear market's inventory clearance cycle did not affect Amer Sports.

On August 20, Amer Sports' parent company (AS.NYSE) released its second-quarter 2024 results, with revenue reaching $994 million, a 16% year-on-year increase; recording a net loss of $4 million, a 98% decrease in losses; and adjusted net profit of $25 million, a 129% year-on-year increase.

This means that the current revenue far exceeded the expected 10%, and the profit performance also exceeded expectations.

Combining the first-quarter data, Amer Sports achieved a total revenue of $2.177 billion in the first half of the year, with a net profit of $5.1 million, turning losses around compared to the same period last year when the company had a net loss of $78.1 million.

After the performance announcement, Amer Sports raised its full-year expectations: revenue is expected to increase by 15%-17% year-on-year; and the gross profit margin was raised by 0.5 percentage points to 54.5%.

The Greater China and Asia-Pacific regions are the growth pillars for Amer Sports, with year-on-year growth of 52% to $599 million and 39% to $210 million, respectively, in the first half of the year.

An Amer Sports executive stated at the briefing that in the Chinese market, Amer's store and e-commerce channel business grew by over 54% in the second quarter.

It was specifically mentioned that both the Salomon and Arc'teryx brands in China's regular stores have almost no discounts, and outlet discounts are only 20% to 25%.

"We also encountered supply shortages, but we are optimistic about the future business trends in the Chinese market," the executive added.

When asked about Amer's expectations for opening stores and expanding in the Chinese market, as well as the direction of expansion, by TradeWind01, no response was received as of the time of drafting.

Amer Sports mainly relies on DTC (direct-to-consumer) channels for expansion. Wholesale channels remained flat in the first half of the year, contributing $1.239 billion in revenue, while DTC channels grew by 40% year-on-year to $938 million.

With the higher-margin DTC channels accounting for a higher proportion, Amer Sports' gross profit margin increased by 1.62 percentage points year-on-year to 54.66%.

As of the end of June 2024, Amer Sports had 391 self-owned retail stores.

After Anta Sports (2020.HK) completed the acquisition of Amer Sports in 2019, it began the DTC transformation of Amer in the Chinese market.

Currently, most of Amer's stores in the Chinese market are self-operated, leading to higher operating profit margins in the Greater China region compared to other regions.

Now, Amer Sports aims to replicate this experience with other brands and in other regions.

The above-mentioned Amer Sports executive stated, "The success in China has allowed us to expand this model to Japan and the Asia-Pacific region, and we started testing the European market in Paris in May this year. Although markets outside China are still in the early stages, our stores in Osaka and Paris have performed well, enhancing our confidence in continuing to explore this model."

Goldman Sachs' report believes that against the backdrop of overall weak consumption and cautious outlooks from several sportswear companies (such as Li-Ning/Anta lowering full-year revenue guidance, and Nike being cautious about the Chinese market), Amer Sports' continued strong momentum and management's optimistic outlook on the outdoor category are encouraging, providing a positive signal for Anta's outdoor business After the performance announcement, Amer Sports closed up 10.36% at $13.63 per share on the same day, with a 7.91% decline year-to-date