Amer Sports, Inc. (AS) Earnings

Management highlights

- Brand Growth and Portfolio Strategy * The company delivered broad-based 32% reported (30% ex-currency) total revenue growth in Q2 2026, with all segments, geographies, and channels achieving double-digit growth, driven by its three core growth engines: Arc'teryx, Salomon Softgoods, and Wilson Tennis 360, all of which remain early-stage with significant long-term growth runway. * D2C revenue grew 40% and reached a record 55% of total group revenue, while wholesale grew 24%. Asia Pacific revenue grew 60%, Greater China grew 36%, the Americas grew 26%, and EMEA grew 20%. * Adjusted gross margin increased 710 basis points to 65.8% (300 basis points underlying growth excluding a $64.3 million one-time net tariff refund), driven by favorable pricing, product/channel/geographic mix, and lower transportation/duty costs. Adjusted operating margin increased 730 basis points to 12.8% (340 basis points underlying growth), and adjusted diluted EPS reached 22 cents (up from 6 cents prior year, with an 8 cent benefit from the tariff refund). - Arc'teryx (Technical Apparel) Strategic Updates * Delivered broad-based growth across all regions, channels, and categories, with women's category growing faster than any other segment. New products and seasonal colorways generated over 60% of women's sales in Q2, driven by improved fit, expanded assortments, and redesigned core styles tailored for female consumers. * Footwear delivered strong double-digit growth, led by existing top styles (Northern LD4, Conceal) and the successful recent launch of the Silent 2 technical trail racing shoe. 8 Arc'teryx athletes are scheduled to compete in the upcoming UTMB race. * Added 5 new ReBirth centers in Q2, bringing the total to 47, and will launch a new product innovation combining circularity and technical performance later in 2026. The Chamonix Alpine Academy drew over 15,000 visitors in July, with women accounting for half of clinic participants. * Opened 8 net new stores globally in Q2, plans 30-35 net new full-year stores, including 10-12 net new stores in Greater China (which has 140 total stores currently, with a 200-store long-term target). Arc'teryx brand awareness in the U.S. has risen ~50% year-over-year, and will enter 15 premium Dick's Sporting Goods House of Sports locations for fall-winter 2026 in a test format. North America currently has 75 stores, with a 200-store long-term target, while EMEA has 19 stores with a 75+ store long-term target. - Salomon (Outdoor Performance) Strategic Updates * Global sports style momentum is strong, with the XD6 and XD Whisper franchises resonating with younger, urban consumers. New global ambassador Jisoo generated nearly 1 billion consumer impressions across social platforms. Performance lines are also growing, with the Gribble running franchise unlocking significant traction in run specialty channels, and recent new launches (Arrow Brace 4, second-generation Genesis) performing well, validated by pro athlete race wins including Courtney DeWaters' fourth Hardrock 100 title. * Salomon delivered strong double-digit growth in Greater China, with highly productive D2C Salomon Shops. 13 net new stores were opened in Greater China in Q2, bringing the total to 315, with a 400-500 long-term store target and 45 net new full-year stores planned. Strong growth is also seen in Korea and Japan, key markets for global sneaker culture. * The epicenter strategy focused on key global metro markets is working, with strong sales and brand growth in existing tier-one epicenters. The strategy will expand to Berlin, Seoul, Miami, San Francisco, Chicago, and Boston. The first North American Salomon flagship carrying full footwear and apparel lines opened in New York City's Flatiron District in Q2, with a Beverly Hills location planned for October. 7-10 net new Salomon stores are planned for the Americas full-year. Selective expansion with key U.S. wholesale partners (Nordstrom, Foot Locker, JD Sports) is underway, with early pre-orders, sell-through, and reorders performing very well. * In Europe, home to Salomon, strong demand and pre-orders are led by sports style, with growing traction for gravel running, supported by marketing and event activations including the Gravelanza event and a new partnership outfitting Paris National Opera House dancers. - Wilson (Ball and Racket) Strategic Updates * The Wilson Tennis 360 strategy continues to outperform, with two record racket launches in spring 2026: the Blade V10 and the Defy (Wilson's first power spin racket), with early Defy sales exceeding even the Blade V10 launch. Four new top-5 world-ranked players were recently signed to endorse Wilson products, and pro Marta Kostyak reached the semifinals of both Roland Garros and Wimbledon generating significant brand buzz. * Wilson Soft Goods delivered exceptional strong double-digit growth across all four regions. 12 net new Wilson brand stores were opened in Q2, mostly in Greater China and APAC, with 40 net new full-year Wilson Tennis 360 shops planned for China. Padel has become a top 5 revenue driver for the segment, and baseball, golf, and inflatables all returned to growth in Q2. Wilson is now in 450 Dick's Sporting Goods locations with its full head-to-toe-to-hand Tennis 360 offering. - Operational Highlights * Inventory increased 19% year-over-year, well below the 32% total sales growth, and inventory normalized against revenue earlier than planned. Operating cash flow reached $339 million in H1 2026, up from $108 million in H1 2025.

Guidance

- Full-year 2026 overall guidance: Management raised total revenue growth guidance from 20-22% to approximately 24%, which includes a 200-250 basis point currency benefit at current exchange rates. Adjusted gross margin guidance was raised from 59-59.5% to 60.5-61%, which includes an 80 basis point benefit from the Q2 net tariff refund. Adjusted operating margin guidance was raised from 13.4-13.7% to 14.2-14.5%. Adjusted diluted EPS guidance was raised from $1.18-$1.23 to $1.27-$1.30. - Segment full-year 2026 guidance: Technical apparel revenue growth guidance was raised from 22-24% to 25-26%, and adjusted operating margin guidance was raised to ~22.5% (including 30 basis points of tariff benefit). Outdoor performance revenue growth guidance was raised from 22-24% to 27-28%, and adjusted operating margin guidance was raised from 15-15.5% to 16-16.5% (including 50 basis points of tariff benefit). Ball and Racket revenue growth guidance was raised from 10-12% to ~14%, and adjusted operating margin guidance was raised from 4.7-5% to 6.7-7.2% (including 250 basis points of tariff benefit). - Full-year 2026 additional guidance: Net finance costs are expected to be ~$85 million (up from prior $70 million guidance due to higher hedging costs, FX losses, and lease expense). The effective tax rate is maintained at 28%. Corporate expenses are now expected to be $240 million (up from prior $220 million due to higher IT investment and deferred compensation). CapEx guidance is maintained at ~$400 million, primarily for retail expansion and IT infrastructure. - Q3 2026 guidance: Group reported revenue growth is expected to be 18-20%, including ~50 basis points of FX tailwind. Adjusted gross margin is expected to be ~59%, and adjusted operating margin is expected to be 13.5-14%. Adjusted diluted EPS is expected to be 31-33 cents. - Management noted that if better-than-expected demand materializes, the company is well-positioned to deliver results above current guidance.

Segment performance

1. Technical Apparel: Revenues increased 32% year-over-year to $674 million, representing 41.3% of total company revenue. D2C revenue grew 34%, and wholesale revenue grew 27%. Adjusted operating margin expanded 470 basis points to 18.8%, including a 170 basis point benefit from net tariff refunds. All regions delivered strong double-digit growth, led by Asia Pacific. 2. Outdoor Performance: Revenues increased 37% year-over-year to $569 million, representing 34.8% of total company revenue. D2C revenue grew 52% (28% same-store comp), and wholesale revenue grew 25%. Adjusted operating margin expanded 800 basis points to 14.6%, including a 270 basis point benefit from net tariff refunds. Growth was led by Salomon footwear and apparel, with strong momentum across all regions, especially APAC, Greater China, and the Americas. Winter sports equipment saw positive order book trends and continued market share gains despite uneven conditions. 3. Ball and Racket: Revenues increased 24% year-over-year to $390 million, representing 23.9% of total company revenue. Growth was led by double-digit growth in soft goods and over 50% growth in performance rackets driven by new product launches, with Padel emerging as a top 5 revenue driver. All regions delivered double-digit growth, led by Greater China, APAC, and EMEA. Adjusted operating margin increased 1300 basis points to 17.2%, including a 970 basis point benefit from net tariff refunds.

Risks & headwinds

The call did not identify any material new operational risks or failures beyond general standard forward-looking statement disclosures that risks and uncertainties could cause actual results to differ materially from management expectations. The only factors highlighted that could impact results include: ongoing uneven macroeconomic and consumer demand conditions in the overall European market, inconsistent snow conditions impacting the winter sports equipment segment, and the one-time nature of the 2026 net tariff refund that will not repeat in future periods.

Analyst Q&A

• Q: Can you elaborate on Q3 top-line momentum, and explain why guidance was not raised more given strong H1 results? /

  A: James noted that strong momentum from Q2 is continuing into Q3, with the company on track to deliver 24% full-year growth on a much larger base, and management remains confident in the healthy trajectory of the core brands. Andrew added that management prioritizes providing ambitious yet responsible guidance, and will deliver over 100 basis points of full-year margin expansion in line with the company's consistent track record of ~150 basis points of annual margin expansion since IPO. Continued targeted investment in the three core growth engines, higher net hedging/finance costs, and increased corporate IT investments justify the current guidance level while still delivering strong bottom-line expansion.

• Q: What is Salomon's current U.S. wholesale footprint with Nordstrom, Foot Locker, and JD Sports, and what is the long-term expansion opportunity? /

  A: Salomon CEO Iom Mizank noted that Salomon follows a quality-over-quantity approach aligned with its epicenter strategy, focused on hand-picked high-impact locations in key metro areas rather than broad numeric distribution. Salomon has an established partnership with Nordstrom, has worked with JD Sports for several quarters, and just launched with Foot Locker in July. Early results for new wholesale partnerships are very strong, with robust pre-orders, sell-through, and reorders. Expansion will remain selective, focused on top locations in core epicenters, to protect Salomon's premium brand positioning while leveraging the large existing consumer traffic of wholesale partners and their strong e-commerce platforms.

• Q: Where is the company increasing growth investments in the back half of 2026, and what categories of spend are increasing? /

  A: Andrew explained that given the significant long-term value creation potential of the three core growth engines, the company is choosing to reinvest margin upside to drive sustainable growth while still delivering strong annual margin expansion, which is already running above the 30-70 basis point annual target. James added that for Arc'teryx, investments are focused on increasing global brand awareness, retail expansion, and product development for women's footwear and apparel. For Salomon, investments support the epicenter expansion strategy in Europe and North America, D2C retail expansion across Asia and North America, and global brand campaigns. For Wilson, investments are focused on expanding the Wilson Tennis 360 platform including retail expansion across Asia and North America.

• Q: What is your outlook for European growth, and are you seeing the same slowdown that other brands have reported recently? /

  A: Iom Mizank noted that the overall European market is growing slowly, but Salomon is well-positioned to outperform due to its unique competitive positioning in two high-growth segments: trail/gravel running, which continues to generate strong consumer interest and conversion, and the modern outdoor sneaker segment, which Salomon pioneered. The overall challenging market environment still has significant room for Salomon growth, as the brand brings a unique offering of modern mountain sport performance to urban consumers that resonates strongly.

• Q: How do the different channel strategies of Arc'teryx and Salomon align for long-term channel mix, and how can their regional successes accelerate U.S. penetration? /

  A: Arc'teryx CEO Stuart Hazelden noted that both DTC and premium wholesale are important for Arc'teryx: DTC has been a major growth catalyst by enabling full brand control and premiumization, while selected premium wholesale partners help expand brand reach and positioning. For the U.S. market, Arc'teryx leverages its strong home base in Canada, combines DTC store expansion in major markets and mountain towns with selected wholesale partnerships, building an omnichannel brand. Salomon CEO Iom Mizank noted that Salomon is also building a global omnichannel strategy, not just relying on wholesale. For the U.S. market, the strategy is focused on opening DTC stores in core epicenters, building a best-in-class e-commerce experience, and partnering with wholesale to leverage their large existing consumer traffic, while maintaining consistent premium brand positioning and local community activation across all channels. James added that as the current largest premium outdoor brand in China, Arc'teryx will continue to deliver solid double-digit annual growth in China as it expands from 140 current stores to its 200-store long-term target.