Amer Sports topped market expectations for first-quarter revenue and profit on Tuesday, helped by higher pricing and robust demand for its popular sporting goods brands in China and the United States.
The Wilson tennis racket maker also expects full-year earnings per share at the higher end of its prior forecast range of 30 cents to 40 cents.
MARKET REACTION
Shares have risen 23% from their IPO price of $13, as of last close. But they fell about 4% in premarket trading after the company forecast current-quarter loss marginally bigger than the estimates.
CONTEXT
Amer Sports benefited from demand for its sporting apparel brand Salomon, particularly in the direct-to-consumer channel, as consumers look to purchase fresh styles.
This comes when retailers in the U.S. are trimming inventories, leading to weak demand in the wholesale channel for sporting apparel manufacturers such as Nike and Under Armour.
Amer Sports also saw strong sales for its pricier Arc’teryx brand, which makes technical apparel such as climbing gear.
WHY IT IS IMPORTANT
China is the company’s largest market, where it has key suppliers and manufacturing facilities.
But escalating trade tensions between the world’s two biggest economies could hurt its ability to sell goods manufactured in China to the U.S.
KEY QUOTE
“Our transformation to a brand-direct business model four years ago continues to fuel profitable growth today, and our high-performance technical products are resonating with consumers globally,” said CEO James Zheng.
BY THE NUMBERS
The company’s first-quarter revenue of $1.18 billion beat LSEG expectations of $1.13 billion.
Excluding items, profit of 8 cents per share also beat analysts’ estimate of 4 cents.
Revenue in China grew 51%, following 45% growth in the fourth quarter.
It forecast second-quarter loss per share to be between 4 cents and 8 cents, while analysts expect a loss of 5 cents.
(Reporting by Juveria Tabassum in Bangalore; Editing by Shilpi Majumdar)
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