Shares of Amer Sports Inc. fell 6% in premarket trades Tuesday following the release of the company's first quarterly results since its February IPO.

Revenue Exceeds Expectations, But Loss Widens

The Finnish sportswear company, known for brands like Arc’teryx, Salomon, and Wilson, reported better-than-expected fourth-quarter revenue, particularly driven by growth in China. However, Amer Sports also reported a wider-than-expected loss. The company reported a fourth-quarter net loss of $94 million, or a loss of 25 cents a share, compared to $148 million, or a loss of 39 cents a share, in the same period the previous year. This loss per share number accounts for a share split related to the IPO but does not include additional shares issued post-quarter end.

Adjusted Performance and Analyst Expectations

On an adjusted basis, Amer Sports reported a net loss of $41 million, or a loss of 11 cents per share, down from a net income of $46 million, or 12 cents per share, in the prior year period. Excluding extraordinary items, analysts surveyed by FactSet had anticipated a loss of 1 cent per share.

Margin Growth and Business Overview

Amer Sports reported an adjusted gross margin of 52.2%, an improvement of 170 basis points from the previous year's quarter. This increase was mainly driven by strong performance in its Arc’teryx brand, which boasted the highest gross profit margin within the company. However, this growth was somewhat tempered by a competitive promotional environment in its Ball & Racquet segment. Positive Growth Continues for Amer Sports

In the latest quarter, Amer Sports reported a revenue of $1.315 billion, marking a 10% increase from the previous year. Although there was an anticipated slowdown from the third quarter, this was attributed to a sales shift within the supply chain. Analysts expected revenue to be at $1.304 billion. Noteworthy regional growth was seen in Greater China with a 45% increase, and the APAC region with a 22% increase. The Americas experienced mid-single-digit growth, mainly driven by direct-to-consumer strength.

First Quarter Expectations and Beyond

Looking ahead to the first quarter, Amer Sports predicts revenue growth of 6% to 8% and earnings between a 1 cent loss and 2 cents a share. However, this projection includes a negative impact of 8 cents to 9 cents from non-recurring finance costs related to the company's refinancing in February. Analysts foresee earnings around 10 cents per share.

Related: Recent IPO Amer Sports taps high-yield bond market with $600 million deal

For the full year, Amer Sports anticipates revenue growth in the mid-teens and earnings between 30 and 40 cents a share. Similarly, this outlook includes an 8-cent to 9-cent negative impact from non-recurring finance costs related to the February refinancing. Adjusted earnings for the full year are expected to be around 51 cents a share according to analysts surveyed by FactSet.

Promising Market Performance

Since its IPO in February, shares of Amer Sports have surged by 29.4%, outpacing the S&P 500 index's gain of 4.6% during the same period. Amidst challenging market conditions, Amer Sports continues to demonstrate resilience and growth potential.

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