Arc’teryx Doubles Down on Performance
● The premium outdoor brand was the top performer for its parent, Amer Sports, last year.
Arc’teryx was the star
of the show for its parent company, Amer Sports, in the fourth quarter.
In its first-quarter reporting as a public company, the Finland-based company that also owns the Salomon, Wilson,
Peak Performance and Atomic brands, reported overall sales increased 10 percent to $1.32 billion and its net loss narrowed to $94 million from $148 million the prior year. Diluted loss per share was 25 cents, compared to 39 cents the prior year.
The adjusted loss per share in the quarter was 11 cents, wider than the 1 cent per share loss analysts were expecting. Gross profit margin grew 170 basis points to 52.2 percent in the fourth quarter, a jump largely driven by the highly profitable Arc'teryx brand.
Stuart Haselden, chief executive officer of Arc'teryx, said his company was “really happy with the holiday period” and the “tremendous momentum” achieved in the fourth quarter. “And that has extended into 2024,” he said. “We're ahead of plan by a good amount.”
He attributed the success to a combination of factors: product that continues to resonate with consumers, an ongoing focus on innovation, high-quality designs and a focus on performance.
In fact, Haselden said, over the last three years, Arc'teryx has “rationalized” its assortment to double down on technical merchandise and “exited product that diluted our brand identity.” This tighter assortment, he said, is intended to appeal to the core mountain athlete. Arc'teryx was founded in 1989 by climbers who sought to create and sell better climbing equipment.
Haselden said top-selling products today include its hard shell Beta jacket, a midweight model that works for hiking and skiing and retails for $500. Other popular pieces include the Alpha SV, Arc'teryx's most “pinnacle” product, that retails for $900, as well as the Atom hoodie, an entry-level insulating jacket that was designed to be worn ice climbing but is also appropriate for everyday life. It retails for $300 and is “our most popular single product,” Haselden said.
Also helping Arc'teryx's bottom line is its new focus on direct-to-consumer efforts. In 2019, Haselden said, wholesale accounted for 80 percent of sales. In 2023, that number fell to 25 percent. Arc'teryx operates 140 stores around the world — 35 of which are outlets — as well as an e-commerce site.
The “fundamental difference” that results from this shift away from wholesale, he said, is that Arc'teryx now has a “very direct and close relationship with the customer.” That impacts where the company will open stores going forward and also serves to broaden the appeal of the brand.
Arc'teryx has 40 stores in the U.S. and will open another 14 this year, he said. The existing stores are in “major epicenters” such as New York, Chicago, Los Angeles and San Francisco, but the focus going forward is on mountain towns such as Aspen and Vail, Colo., Jackson Hole, Wyo., and Park City, Utah.
That being said, Arc'teryx is not abandoning major urban areas and Haselden said it will open its largest store outside China later this year on Broadway and Spring Street in SoHo — a 14,000-square-foot location that will serve as a “beacon for the brand.”
Arc'teryx is also expanding its footprint in Europe, where it will open seven stores this year. The company recently debuted a new flagship in Covent Garden in London and its older Piccadilly Circus store in that city has performed so well, he's looking for a new, larger site. Plans also call for two new stores in Paris, two in Germany and one in Chamonix in France.
Another area primed for growth this year is womenswear. The category represents only 22 percent of Arc'teryx's sales — men's is 50 percent and the remainder is footwear, hard goods and accessories — and Haselden has ambitions to grow that number to 40 percent. The company recently invested in its design team with a new head of women's design, former Adidas and Nike executive Ashley Anson, who is updating its color palette to better appeal to females and it is devoting more space to the category in its stores.
Footwear is also viewed as growth vehicle, he said. Although the category only accounts for 6 percent of overall sales now, the company opened a footwear design center in Portland, Ore., in 2022 and will introduce its first new models on Wednesday. “We think footwear can be 15 to 20 percent of the business,” he said.
Within Amer Sports, which was listed on the New York Stock Exchange in February, Arc'teryx is positioned within the technical apparel category along with the small Stockholm-based Peak Performance brand. In 2023, revenues in this division rose 45 percent to $1.59 billion.
The outdoor performance segment, which includes the Salomon brand, saw revenues grow 18 percent year-over-year in 2023 to $1.67 billion. The Ball & Racquet category, which includes the Wilson brand, posted a 7 percent year-over-year increase in sales to $1.11 billion.
Amer Sports chief executive officer
James Zheng said Tuesday that the company is still in early stages of growth.
“We are winning in the premium segment of the sports and outdoor market, which remains healthy and growing,” he said. “Driven by our technical performance products, we believe [our] brands resonate strongly with consumers everywhere, but are still relatively small players on the global stage. Looking forward, our confidence is enhanced by the fact that our highest margin brand, region, channel and category are growing fastest.”
For the full year of 2023, Amer Sports' revenue increased 23 percent to $4.37 billion. Revenues in Greater China increased 61 percent; APAC sales grew 40 percent, Americas grew 15 percent and EMEA grew 14 percent.
The company reported a net loss of $209 million, or 54 cents a share, compared to a loss of $253 million, or 66 cents per share, in 2022.
DTC sales were up almost 50 percent in 2023, largely driven by strong direct sales from Arc'teryx in the Americas and Greater China. Wholesale revenues were up 12 percent in 2023, driven by growth in Greater China and APAC.
For the first quarter, Amer Sports is projecting that revenues will grow between 6 percent and 8 percent with an adjusted gross margin of 53.5 percent. Diluted EPS is expected to be between a loss of 1 cent per share and earnings of 2 cents per share.
For the full year of 2024, Amer Sports expects revenues to increase in the midteens with an adjusted gross margin of between 53.5 and 54 percent. Diluted
EPS is expected to be in the range of 30 cents to 40 cents. By category, technical apparel is expected to achieve sales growth of more than 20 percent, followed by outdoor performance, which is shooting for high-single-digit revenue gains, and
Ball & Racquet, which is projecting low- to midsingle-digit sales increases.
Haselden said that although Amer Sports is new to the public market, that hasn't really impacted his way of operating. “There are actually benefits to being public,” he said, noting that it allowed his parent company to clean up its balance sheet and retire some expensive debt, freeing up funds that had been used for interest payments to be earmarked for investment in brands in its portfolio and to add talent to the teams.
“We have a seasoned management team that is not new to the public market,” he said. So while being public means companies have to be more precise in their estimates and endure the “quarterly grind — that's the trade off.”
MILAN — Pomellato is launching a new awareness campaign to honor International Women's Day on Friday.
The Milan-based jeweler, controlled by Kering, is once again teaming with Jane Fonda and other international activists for the seventh annual Pomellato for Women video to denounce the persistent problem of violence against women.
“With this initiative, we encourage all to be social sentinels who speak up for change,” said Sabina Belli, chief executive officer of Pomellato. “Across every culture on Earth, almost one in every three women has experienced some form of violence — usually carried out by a male partner or family member. With a destructive ripple effect, this is an issue that affects every one of us.”
In an interview, Belli expanded on the issue, which has been close to her heart for years. “There is some progress but we need to keep the attention high. I am pleased to see that the association between the brand and the Pomellato for Women initiatives is increasingly clear and strong.”
For the campaign Fonda is joined by American actress and mental health advocate Lucy Hale; American actor and humanitarian Jesse Williams; Lucia Annibali, an Italian lawyer, advocate for marginalized women and former acidattack victim; Amina Seck, a Senegalese Italian model and former domestic violence victim; Andréa Bescond, a French author, director, actress and victim of childhood assault; Kulsum
Shadab Wahab, an Indian foundation director, humanitarian and advocate for marginalized groups; Gregorio Paltrinieri, an Italian award-winning freestyle swimmer, and Fabio Roia, an Italian magistrate, the President of the Court of Milan, and a lifelong defender, scholar and educator about domestic violence issues.
“We asked ourselves why genderrelated violence and domestic violence continues to prevail,” Belli said. “Whenever there is a question — and this is a very difficult one — an answer is expected. The question shouldn't just hang in the air. The complexity lies also in the fact that there is not a single and univocal response, but many.”
Studies point to patriarchal domination across the board and with deep roots in all global societies. “If there isn't a single solution, we must find ways to protect women,” Belli said.
A starting point is “to listen to and believe women, rather than doubting them,” she said, urging the creation of