23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

Amer Sports (**AS**) is a global company specializing in the design, manufacture, marketing, and sale of sports equipment, apparel, footwear, and accessories. The company operates through direct-to-consumer and wholesale channels, serving customers in over 34 countries. Its portfolio includes iconic brands such as Arc’teryx, Salomon, Wilson, Atomic, and Peak Performance, catering to a wide range of sports and outdoor activities.  **[0001104659-24-007307_tm2322981-15_f1a.htm:135]** **[0001628280-24-037880_as-20240630.htm:4]** 

1. **Technical Apparel** - Offers premium outdoor apparel, footwear, and accessories, featuring innovative and minimalist designs. Key brands include **Arc’teryx**, known for high-performance technical outdoor gear, and **Peak Performance**, which focuses on stylish and functional apparel.  **[0001104659-24-007307_tm2322981-15_f1a.htm:135]** **[0001104659-23-119627_filename1.htm:129]** **[0001104659-23-101667_filename1.htm:123]**   
2. **Outdoor Performance** - Provides outdoor apparel, footwear, accessories, and winter sports equipment. Key brands include **Salomon**, a leader in trail running and hiking footwear, and **Atomic**, specializing in skis and other winter sports gear.  **[0001104659-24-007307_tm2322981-15_f1a.htm:135]** **[0001104659-23-119627_filename1.htm:129]** **[0001104659-23-101667_filename1.htm:123]**   
3. **Ball & Racquet Sports** - Produces high-performance sports equipment, apparel, and accessories for various sports. Key brands include **Wilson**, a leading manufacturer of tennis, baseball, and other racquet sports products, and **Louisville Slugger**, known for baseball bats.  **[0001628280-24-037880_as-20240521xexx991.htm:1]** **[0001104659-23-119627_filename1.htm:129]**

919fd220b89f8d5ec823ff00d47b8a458f0e7d373a92b6f3290a654929f355a3

1. Given that your effective tax rate guidance remains elevated at approximately 37% for 2025  **[AS_3409368_8]** **[AS_3409368_13]** , despite efforts to reduce it, what specific measures are you implementing to bring this rate down to more normalized levels over time, and what timeline should investors expect for this improvement?

2. With plans to continue opening Arc’teryx stores at a net rate of 30 per year  **[AS_3409368_10]** **[AS_3409368_5]** , alongside investments in Salomon stores in China and the rest of APAC  **[AS_3409368_11]** , how are you managing the risks of overexpansion and ensuring these investments yield sustainable growth, especially given competitive and economic uncertainties in these regions?

3. The Ball & Racquet segment's adjusted operating profit margin increased to 6.9% in Q3, primarily due to new product launches and lower discounting after last year's inventory clearance  **[AS_3409368_7]** ; how do you plan to sustain this margin improvement, and what strategies are in place to drive growth in this segment given your expectation of low to mid-single-digit long-term growth  **[AS_3409368_6]** ?

4. Considering that Winter Sports Equipment represents a third of your Outdoor Performance segment but has shown softer trends, with expectations of low single-digit annual growth due to slower trends in North America and cautious orders in EMEA  **[AS_3409368_6]** , what initiatives are you undertaking to revitalize this segment and address market challenges to improve growth prospects?

5. With Salomon's footwear business in the U.S. still at a preliminary stage and efforts underway to penetrate the market  **[AS_3409368_12]** , what gives you confidence in achieving significant market share in the highly competitive U.S. market, and what specific strategies will you employ to overcome previous challenges in gaining traction as you plan to open new stores and build partnerships with key accounts?

4871b54d82f865de78865b75363a57a67010e64e793154c2531f61b15a579a51

| Name                     | Position                                      | Start Date | Short Bio                                                                                                                                                                                                                     |
|--------------------------|-----------------------------------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Jie (James) Zheng        | Chief Executive Officer and Director          | 2020       | Jie (James) Zheng has been CEO of AS since **2020**. He has a background in the sports and apparel industry, including senior roles at Adidas and ANTA Sports.  **[0001104659-24-035553_as-20231231x20f.htm:134]** **[0001104659-23-107260_filename1.htm:224]** **[0001104659-24-007307_tm2322981-15_f1a.htm:240]**                                                     |
| Andrew E. Page           | Chief Financial Officer                       | 2023       | Andrew E. Page has been CFO of AS since **2023**. He previously held CFO roles at Foot Locker and Advance Auto Parts and senior roles at Under Armour.  **[0001104659-24-007307_tm2322981-15_f1a.htm:240]** **[0001104659-24-005372_tm2322981-12_f1a.htm:238]** **[0001104659-23-090505_filename1.htm:210]** **[0001104659-24-001168_tm2322981-10_f1.htm:232]**                                                          |
| Michael Hauge Sørensen   | Chief Operating Officer                       | 2020       | Michael Hauge Sørensen has been COO of AS since **2020**. He previously held leadership roles at ECCO and served on the boards of companies like Pandora Jewelry and IC Group.  **[0001104659-23-107260_filename1.htm:224]** **[0001104659-24-035553_as-20231231x20f.htm:135]** **[0001104659-23-119627_filename1.htm:241]**                                       |
| Wen-Chang (Victor) Chen  | Chief Strategy Officer                        | 2020       | Wen-Chang (Victor) Chen has been CSO of AS since **2020**. He was previously a Partner at Boston Consulting Group and held roles at Golin.  **[0001104659-24-007307_tm2322981-15_f1a.htm:241]** **[0001104659-24-005372_tm2322981-12_f1a.htm:239]** **[0001104659-24-001168_tm2322981-10_f1.htm:233]** **[0001104659-24-035553_as-20231231x20f.htm:135]**                                                                      |
| Stuart C. Haselden       | Chief Executive Officer of Arc'teryx          | 2021       | Stuart C. Haselden has been CEO of Arc'teryx since **2021**. He previously held leadership roles at Away and Lululemon Athletica.  **[0001104659-24-007307_tm2322981-15_f1a.htm:241]** **[0001104659-24-005372_tm2322981-12_f1a.htm:239]** **[0001104659-24-001168_tm2322981-10_f1.htm:233]** **[0001104659-24-035553_as-20231231x20f.htm:135]** **[0001104659-23-119627_filename1.htm:242]**                                                                           |
| Franco Fogliato          | President and Chief Executive Officer of Salomon | 2021       | Franco Fogliato has been CEO of Salomon since **2021**. He previously held roles at Columbia Sportswear Company and Billabong.  **[0001104659-24-007307_tm2322981-15_f1a.htm:241]** **[0001104659-24-005372_tm2322981-12_f1a.htm:239]** **[0001104659-24-001168_tm2322981-10_f1.htm:233]** **[0001104659-24-035553_as-20231231x20f.htm:135]** **[0001104659-23-119627_filename1.htm:242]** **[0001104659-23-090505_filename1.htm:211]** **[0001104659-23-107260_filename1.htm:226]** **[0001104659-23-101667_filename1.htm:219]**                                                                 |
| Joseph Dudy              | President and Chief Executive Officer of Wilson | 2019       | Joseph Dudy has been CEO of Wilson since **2019**. He joined Wilson in **1995** and has held various roles, including Finance Director of Wilson Team Sports.  **[0001104659-24-035553_as-20231231x20f.htm:135]** **[0001104659-24-007307_tm2322981-15_f1a.htm:241]** **[0001104659-24-005372_tm2322981-12_f1a.htm:239]** **[0001104659-24-001168_tm2322981-10_f1.htm:233]** **[0001104659-23-119627_filename1.htm:242]** **[0001104659-23-107260_filename1.htm:226]** **[0001104659-23-101667_filename1.htm:219]** **[0001104659-23-090505_filename1.htm:212]**                                    |

98e7c576c974f0e34e83143d5e748555d3a8ab488b1db724e5af57091f74dcdf

- The company expects **SG&A expenses to remain flat next year**, delaying operating leverage and potentially limiting margin expansion until after 2025.  **[AS_3409368_11]**
- An **effective tax rate of approximately 37% is expected in 2025**, which is relatively high and may impact net income and earnings per share.  **[AS_3409368_8]**
- **Salomon footwear faces challenges in gaining traction in the North American market**, and the business is still in the preliminary stages in the U.S., which may limit growth potential for this segment.  **[AS_3409368_12]**

d2aeeb7c8700ce8e7ac0c4d65978c184864965c7fcaf097268074bc73c9eca75

- **Europe revenue growth is expected to be only mid-single-digit growth**, with challenges in the **Peak Performance** brand, which is facing difficulties, potentially limiting overall growth in the region.  **[AS_3399371_13]**
- **The promotional environment in China is difficult**, with a high level of discounting due to high inventory levels at retailers, which may impact profitability and pose risks to the company's performance in that market.  **[AS_3399371_13]**
- **Salomon's Direct-to-Consumer (DTC) expansion outside of China is still in its infancy**, particularly in key markets like North America where they are just beginning to test the market with pop-up stores, making growth prospects uncertain.  **[AS_3399371_14]**

4043b595bc086f409769b0d2629a516dd01e9f93e5a983dd479af17e5fababca

- **Strong Growth in Arc’teryx Brand Driving Gross Margin Expansion**: The company's most profitable franchise, Arc’teryx, continues to show strong momentum with robust customer acquisition trends and high-quality full-price growth across regions and channels. This growth is significantly contributing to gross margin expansion, which reached **54%** in 2024, surpassing the long-term target, with expectations for further improvement as the brand grows.  **[AS_3390163_6]**
- **Strategic Investments Fueling Future Growth**: The company is reinvesting a portion of its top-line beat into critical strategic investments, focusing on infrastructure, supply chain, technology, and digital platforms to support and sustain its pace of growth. This includes strengthening e-commerce and opening **17 new stores** in the second quarter, the highest quarterly number ever.  **[AS_3390163_8]**
- **Expanding Leadership in China Amid Positive Market Trends**: Despite challenges in the Chinese economy, the company is experiencing strong growth in China due to increased consumer participation in sports and outdoor activities. Brands like Arc’teryx and Salomon are uniquely positioned in the premium segment of China's outdoor market and are taking on leadership roles, which is expected to drive continued growth.  **[AS_3390163_9]**

99630ed81948c080ea1b4897bcac8d77af79c3b360c647d05d971387fd815666

- **Strong growth in the Chinese market**, with the sports industry in China estimated to grow at high single digits and the outdoor segment growing even faster, providing significant opportunities for Amer Sports brands like Arc’teryx and Salomon.  **[AS_3409368_9]**
- **Arc’teryx's exceptional performance**, exceeding expectations in every region, channel, and product category, including over **50% growth in the women's category** and **footwear sales penetration increasing from 6% to 10%** since March. The successful opening of the flagship store in Manhattan's Soho district further enhances brand visibility.  **[AS_3409368_10]** **[AS_3409368_11]**
- **Salomon's footwear expansion potential**, especially in North America, highlighted by the opening of a pop-up shop in New York City that's performing extremely well, indicating great potential for Salomon’s innovative footwear products in the U.S. market.  **[AS_3409368_12]**

557196c4efab5af3c28271bd06b6b84ca532f0180d4532353c79b5240fb3ae32

1. **Capital Allocation Priorities**  
   **Q:** How will you allocate capital and use free cash flow?  
   **A:** Andrew explained that they are focusing on growing the business by opening about **30 new Arc’teryx stores** this year and expect a similar run rate next year.  **[AS_3409368_10]**  They anticipate capital expenditures approaching **$300 million** in 2024, focusing on store build-out and ERP system implementation.  **[AS_3409368_10]**  In 2025, they will continue to invest in growth, manage debt carrying costs by swapping higher interest rate debt to lower rates, resulting in annual savings of almost **$10 million** next year.  **[AS_3409368_10]**  They expect free cash flow to increase next year over this year.  **[AS_3409368_10]** 

2. **Revenue Guidance and Potential Upside**  
   **Q:** Where do you see upside to next year's revenue guidance?  
   **A:** Andrew stated they expect **low to mid-teens** revenue growth next year, consistent with this year.  **[AS_3409368_14]**  As demand materializes, they can service it and potentially outperform guidance.  **[AS_3409368_14]**  Stuart added they are excited about opportunities across regions, especially in North America, Europe, and Asia Pacific, with strong momentum in China.  **[AS_3409368_14]**  They see potential in footwear, women's, and core men's outdoor business, with new products in the pipeline that could create upside in the future.  **[AS_3409368_14]** 

3. **Gross Margin and SG&A Outlook**  
   **Q:** How should we think about SG&A relative to sales next year?  
   **A:** Andrew mentioned they are extremely pleased with continued gross margin expansion.  **[AS_3409368_11]**  In 2025, they expect SG&A to be **flat leverage** to this year.  **[AS_3409368_11]**  They plan to invest in new Arc’teryx stores, Salomon stores in China, and Wilson stores in China and APAC.  **[AS_3409368_11]**  They are also investing in talent acquisition, retention, and technology to drive sustainable growth.  **[AS_3409368_11]**  They remain consistent with plans to begin leveraging the business post-2025 into 2026.  **[AS_3409368_11]** 

4. **Tax Rate Outlook**  
   **Q:** How will your tax rate change over time?  
   **A:** Andrew highlighted that they are exiting 2024 with a **50%** effective tax rate.  **[AS_3409368_13]**  Next year, the rate is more than **1,000 basis points** better than their exit rate, meaning it will decrease by over **10 percentage points**.  **[AS_3409368_13]**  They have reduced nondeductible interest and settled outstanding tax constraints.  **[AS_3409368_13]**  Going forward, they expect the tax rate to continue coming down to a more normalized rate in the near future.  **[AS_3409368_13]** 

5. **Footwear Expansion and Wholesale**  
   **Q:** What is the footwear opportunity and plans for wholesale expansion?  
   **A:** Stuart discussed plans to expand their footwear business, including through wholesale channels.  **[AS_3409368_12]**  Footwear penetration increased from **6%** to **10%** since launching new models in March.  **[AS_3409368_12]**  Their midterm goal is for footwear to reach **20%** of revenues in the coming years.  **[AS_3409368_12]**  They believe wholesale is critical for building brand awareness and meeting customer shopping preferences.  **[AS_3409368_12]** 

6. **Performance Across Regions**  
   **Q:** How did Arc’teryx perform across regions in Q3?  
   **A:** Stuart reported they exceeded expectations in every region, channel, and product category.  **[AS_3409368_11]**  The APAC business, led by Japan, had the highest growth rate.  **[AS_3409368_11]**  China was the second fastest-growing region, followed by North America and Europe.  **[AS_3409368_11]**  They saw high full-price sell-throughs, especially in North America, and reduced off-price selling.  **[AS_3409368_11]**  Their two-year stacked comp was **88%**, and they could have had higher comps with more inventory.  **[AS_3409368_11]** 

7. **China Market Growth**  
   **Q:** What's happening with Chinese consumers and opportunities in the region?  
   **A:** Jie Zheng noted that the sports segment is booming in China, with an estimated **high single-digit growth** in the sports industry this year.  **[AS_3409368_9]**  The outdoor segment is growing more than the industry average.  **[AS_3409368_9]**  More consumers in Tier 1 and Tier 2 cities are embracing outdoor activities as part of their lifestyle.  **[AS_3409368_9]**  This presents a good opportunity for them, especially for Arc’teryx and Salomon.  **[AS_3409368_9]** 

8. **Salomon's New Leadership**  
   **Q:** What does Gillam's promotion mean for Salomon's future?  
   **A:** Jie Zheng highlighted that Guiyang has over **28 years** of experience with Salomon.  **[AS_3409368_13]**  He has a strong track record in sales, product innovation, and operational excellence.  **[AS_3409368_13]**  He built the modern outdoor sneakers category, achieving tremendous success in the past **5 years**.  **[AS_3409368_13]**  The future strategy focuses on accelerating footwear globally, winning in Europe, building a strong footprint, and leveraging digital platforms.  **[AS_3409368_13]** 

9. **Salomon Footwear in North America**  
   **Q:** How are you growing Salomon footwear in North America?  
   **A:** Jie Zheng stated they are in the preliminary stages of expanding Salomon footwear in the U.S..  **[AS_3409368_12]**  They opened a pop-up shop in New York City on **October 2**, which performed extremely well in the first month.  **[AS_3409368_12]**  They plan to roll out similar footwear concept shops next year.  **[AS_3409368_12]**  They are building partnerships with key accounts and retailers to enhance product assortment and merchandising.  **[AS_3409368_12]**  They are also working on community strategies to build brand awareness.  **[AS_3409368_12]** 

21c0ffec770b694de8b3a4c993ee363dc5e3acaa5198e1a6fef3e19be12746ee

- **Challenges in the North American wholesale market**, with retailers adjusting ordering patterns due to inventory levels, may impact sales growth in the **Ball & Racquet** and **Outdoor Performance** segments. The company acknowledges that retailers are working through inventory and ordering closer to need, affecting sell-in.  **[AS_3390163_7]** **[AS_3390163_10]** **[AS_3390163_8]**
- **Macroeconomic challenges in China** could pose risks to continued growth, as the **Chinese economy faces significant challenges**, and consumer sectors like luxury and cosmetics have slowed down. Despite current strong performance, the company notes the potential impact of the economic environment.  **[AS_3390163_9]**
- The **departure of the Salomon brand CEO** and the anticipated **6 to 12 months** search for a new leader may lead to uncertainties in executing Salomon's growth strategy, potentially affecting its performance, especially in the key footwear segment.  **[AS_3390163_13]**

bd3e7f51657e328243fa610246fc86ad752d6b58499f57cb5b97af280d2e509d

- **Arc'teryx continues to experience strong, balanced growth across all regions, with plans to expand its North American store count from around **60** at year-end to over **200**, indicating substantial growth potential ahead.**  **[AS_3399371_9]** **[AS_3399371_10]**
- **Salomon footwear is achieving significant success, particularly in China, by creating new categories like 'outdoor sneakers,' and is expanding its direct-to-consumer strategy internationally, aiming to have **200** owned and licensed stores in China by year-end, and opening stores in key markets like Paris and New York City.**  **[AS_3399371_10]** **[AS_3399371_14]**
- **The company anticipates meaningful growth in Q4 due to favorable comparisons and a strong pipeline of new products, while maintaining a lean inventory position—inventory up only **2%** versus **16%** sales growth—positioning Amer Sports well for market share gains and margin expansion.**  **[AS_3399371_7]** **[AS_3399371_12]** **[AS_3399371_15]**

b57b023606ef5ff7fe180bcb9a89e858e587d412622d8ea9b6855d5fa689c328

Amer Sports Inc (AS)

Financials