AS.US 2020.HK
Amer Sports became the biggest U.S. IPO of the year so far when its shares launched in New York in February, giving investors a chance to profit from popular leisure brands such as Wilson and Salomon.

Amer Sports, spun off from Anta Sports, went public on the New York Stock Exchange on Feb. 1

Key Takeaways:

  • Amer Sports reported revenue growth of 61% last year in Greater China, led by Arc’teryx clothing
  • The company is keen to boost the global profile of the Arc’teryx brand by opening more specialty stores


By A. Au

Amer Sports (AS.US) became the biggest U.S. IPO of the year so far when its shares launched in New York in February, giving investors a chance to profit from popular leisure brands such as Wilson and Salomon.

Spun off from the Chinese conglomerate Anta Sports Products Ltd. (2020.HK), Amer listed at $13 a share and made a sluggish start as a public company, rising 3.1% on its debut. But the stock picked up speed after that and is jogging along around 20% higher than its launch price, having peaked at a post-IPO gain of 40% in intraday trade along the way.

This month, shareholders got their first look at the company’s earnings performance as a listed company, which showed the Chinese market to be a major focus and growth engine.

Even if the name Amer does not ring a bell, readers will be familiar with its products in sports shops and online marketplaces. The company’s international brand portfolio includes Arc’teryx outdoor clothing, Wilson sporting goods and Salomon running shoes.

Founded in 1950 in Finland, Amer listed on the Nasdaq Helsinki in 1977. In 2019 it was taken private by a consortium of Anta Sports, the private equity fund FountainVest Partners, lululemon founder Chip Wilson and Tencent (0700.HK). Anta, as a major shareholder, currently holds 47.46% of Amer shares.

Anta scored a major sportwear success with the Chinese rights to market the Fila brand. It is now looking to repeat that lucky strike by turning Amer into a champion of China’s sporting goods market, with Arc’teryx as the flagship product. Strong Chinese sales momentum certainly leaps out from the firm’s latest earnings report on March 5.

The company kicked off its earnings record as a public company with a 23% rise in revenues to $4.37 billion for 2023, while its annual net loss narrowed 17.4% to $209 million. Adjusted EBITDA rose 34.9% to $611 million from 2022, excluding revenues from discontinued operations, restructuring charges and losses from write-downs of goodwill and intangible assets. Meanwhile, the company’s adjusted gross margin increased 2.4 percentage points to 52.5%, driven by faster Arc’teryx growth compared to its other brands and reduced logistics costs.

As was the case with Fila, Amer is growing much faster in Asia than in Europe and the United States. Last year, revenue vaulted 61% to $841 million in Greater China and jumped 40% in the Asia-Pacific region. Sales in the Americas lagged the pace with growth of just 15%, while Europe, Middle East and Africa came up the rear with 14%. At just 19.3% of total revenue, Greater China has room to grow as a market.

By business segment, sales of functional apparel rose 45% to $1.59 billion, led by the fast-growing Arc’teryx brand.  Outdoor wear, including Salomon, grew 18% to $1.67 billion and revenue related to ball games, led by Wilson, saw the slowest growth, rising 7% to $1.11 billion.

Fourth-quarter slowdown

But looking more closely at the figures, earnings decelerated in the most recent quarter. Revenues grew 9.7% in the fourth quarter to $1.32 billion, a slower pace than in the two preceding quarters. Sales of Arc’teryx pushed revenue growth from functional apparel to 26% in the quarter, but the outdoor apparel business grew only 2% and income from the ball games segment dropped 3%, capping Amer’s overall revenue.

The expansion pace in Greater China slowed in the fourth quarter but still reached 45%, confirming the region’s standing as the growth engine of the business. The Asia-Pacific market outside China also grew by 22% in the quarter. What worries investors, however, is that revenue in the EMEA region fell 1% in the fourth quarter and rose only 5% in the Americas.

Arc’teryx is being lined up as the next branding sensation for the Anta family after Fila. Amer CEO Zheng Jie said he saw Arc’teryx as a “ground-breaking growth story” that would propel the company’s performance in 2024.

Named after a feathered dinosaur that features in its logo, Arc’teryx started out as a Canadian company, positioning itself as a premium brand for outdoor pursuits such as hiking, skiing and mountaineering. Arc’teryx has 63 self-operated retail stores in China, around half its global network. In January the company opened a high-tech concept store in Shanghai called the “Arc’teryx Museum” to boost brand recognition. The futuristic flagship store boasts 2,400 square meters of space arranged on four themed floors, offering personalized shopping services and immersive experiences in hiking, rock climbing and other outdoor sports.

Amer’s aim was not just to drive in-store sales but to capture the consumer imagination with its brand narrative and image. The strategy paid dividends when Arc’teryx was a hit on the Internet and created a buzz on social media, with posts on platforms such as TikTok and Xiaohongshu providing free brand publicity.

Amer has outlined plans to open more large-scale Arc’teryx stores this year than in any previous year. The company is targeting other regions aside from China where the brand is active. For example, it sees the potential for another 200 or more stores in North America, where the current count is less than 50. Clearly, Amer is chasing the prize of another global hit by betting on the Arc’teryx brand.

Amer’s major shareholder, Anta, has had a tough time on the slumping Hong Kong stock market of late. Anta’s share price fell 27.5% last year and has risen by a mere 2% so far this year, to produce a price-to-earnings (P/E) ratio of about 22 times. Fellow mainland sportswear company Li Ning (2331.HK) has fared worse, falling 70.7% in 2023 and another 2.3% so far this year, for a P/E ratio of only about 12 times. Investors appear to be more bullish about Anta, with its multi-brand strategy, hoping the group can bag another branding success after Fila.

Anta acquired the right to use the Fila brand in China in 2009 and turned the business into a cash cow. But as the years went on the market matured and Fila revenue fell 1.4% in 2022, while gross margin on the product line slipped to 66.4% from 70.5% in 2021. Revenue picked up again in the first half of last year, rising 13.5%, and the company described Fila growth in the third quarter as being in the “low teens”. But it was a far cry from the heady growth rates of more than 50% between 2010 and 2015, and almost 74% in 2019.

The quest for another sporting success probably spurred Anta to acquire Amer in 2019, with Arc’teryx as the prize.

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