OUTDOOR DRIVES AMER SPORTS IN Q3 AS COMPANY STAYS QUIET ON ANTA BID
Amer Sports made it clear Thursday that the company wouldn’t discuss Anta Sports’ acquisition bid leaving the company to focus solely on Amer’s solid third-quarter performance especially in the company’s outdoor segment.
Amer Sports reported earnings in the third quarter ended September 30 increased 47 percent while sales grew 8.5 percent. Net sales for the July-to-September period were €757.2 million, up from €697.9 million in the same period a year ago. In local currencies, net sales increased by 9 percent. Organic growth was 3 percent.
For the third quarter, outdoor net sales were €522 million (up from €468.9 in 2017), an increase of 12 percent in local currencies and driven by the acquisition of Peak Performance. Organic growth was 3 percent. Own retail and e-commerce continued to perform well for Amer in this segment.
“We delivered a solid quarter in line with our expectations, and we made broad-based progress across the portfolio with on-going acceleration in winter sports equipment, sports instruments and ball sports, whilst we also continued to pursue the distribution renewal in footwear with adverse short-term impact but longer term improvement already in sight,” said Heikki Takala, president and CEO.
EBIT for the entire company, excluding items affecting comparability, was €116.9 million (up from €103.8 in 2017). Items affecting comparability were €-5.2 million (€-34 million last year). Earnings per share, excluding IAC, were 70 cents (62 cents in 2017). Earnings per share were 66 cents (40 cents a year ago). Outlook for 2018 was unchanged.
Apparel growth was 31 percent driven by Peak Performance and Arc’teryx. Footwear sales declined by 4 percent due to the continued consolidation of the global distribution footprint. Winter Sports Equipment sales increased by 8 percent, driven by continued strong momentum in all product categories. Sports Instruments sales increased by 15 percent driven by product portfolio and channel expansion. Strong growth in Asia Pacific continued driven by China and Japan.
“Our strategic focus areas are delivering with softgoods accelerating thanks to Arc’teryx which will deliver another year of double digit growth and now Peak Performance which gives us a further boost,” Takala said. “Direct-to-consumer remains on strong growth trajectory at high double digit growth, and building blocks are well in place for further acceleration including significant enhancements in our mobile shopping and own retail expansion. Also, progress in China is strong, and we continue to ramp up our investment for ongoing acceleration. Encouragingly, the U.S. is now returning to a mid-single digit growth.”
For the nine-month year-to-date period, Amer Sports’ net sales were €1,804 million (up from €1,788.6 million the same period in 2017). In local currencies, net sales increased by 5 percent. Organic growth was 3 percent.
Gross margin was 46.1 percent (45.4 percent in 2017). EBIT, excluding IAC, was €134.5 million (€116.3 million last year). Items affecting comparability were €-9.4 million (€-39.5 in 2017). Earnings per share excluding IAC were 70 cents (61 cents a year ago). Earnings per share were 64 (36 cents in 2017).
The strong quarter aside, Amer declined to discuss the most newsworthy nugget from the past few months—an acquisition bid from Anta to buy the Finland-based company.
As SGB reported earlier this month, Anta’s negotiations with Amer Sports about a possible takeover are advancing according to a Bloomberg. Sources indicated that Anta has talked to banks about financing for the transaction and is progressing with due diligence on Amer.
As SGB reported last month, the Chinese sports powerhouse on September 12 had made an all-cash offer to acquire Amer Sports, the owner of Salomon, Arc’teryx, Suunto, Wilson, Louisville Slugger, Precor and a few other niche sports brands.
Anta partnered with FountainVest Partners, a Hong Kong private equity group, to offer €40 per share for Amer, representing a nearly 40 percent premium to the prior trading day’s closing price before the approach was made public. The offer values Amer at more than €4.6 billion (US$5.3 billion).
Global & U.S. Outlook
In 2018, Amer Sports’ net sales in local currencies, as well as EBIT excl. IAC, are expected to increase from 2017. Due to ongoing wholesale market uncertainties, the quarterly growth and improvement are expected to be uneven. The company will prioritize sustainable, profitable growth focusing on the company’s five strategic priorities (Apparel and Footwear, Direct to Consumer, China, U.S. and Connected Devices and Services) whilst continuing the company’s consumer-led transformation.
Amer’s full financial statement is here.
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Photo courtesy Amer Sports