Amer Sport surrenders early gains despite Q2 beat, raised outlook

[Salomon Ski Footwear]
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Amer Sports (NYSE:AS [https://seekingalpha.com/symbol/AS]) has surrendered early premarket gains as better-than-expected second quarter results [https://seekingalpha.com/news/4486861-amer-sports-non-gaap-eps-of-0_06-beats-by-0_03-revenue-of-1_24b-beats-by-60m] and raised guidance for the year was subsequently overshadowed by slightly weaker sales for its Arc’teryx brand and anemic sales in the Americas.

Shares last traded with a loss of 3% into Tuesday’s open.

Led by 35% growth in its Outdoor Performance segment, Amer Sports (NYSE:AS [https://seekingalpha.com/symbol/AS]) realized a 23% increase in sales to $1.236B, $60M above expectations. By the remaining segments, technical apparel sales were up 23% and Ball & Racquet Sports’ sales increased 11%. This contributed to an adjusted profit of $0.06 per share, up a penny from a year earlier and $0.03 better than expected despite a 27% increase in adjusted SG&A expenses. Additionally, gross margin increased 250 basis points to 58.7%.

By region, sales in the Americas increased by just 6% compared to a 42% gain in Greater China, +18% in EMEA, and +45% for Asia Pacific.

For Q3, Amer Sports (NYSE:AS [https://seekingalpha.com/symbol/AS]) expects revenue to increase another ~20% to $1.620B vs $1.54B estimates. Unadjusted EPS is targeted for $0.20 to $0.22 per share versus $0.21 estimates with a gross margin of ~56.5%, down from the previous quarter but up 100 basis points year-over-year.

Assuming U.S. tariffs on China remain at 30% and current tariff rates on other countries remain unchanged, Amer Sports (AS [https://seekingalpha.com/symbol/AS]) now expects revenue growth of 20% to 21% to $6.22B-$6.27B from earlier guidance of $5.96B-$6.064B. The current guidance exceeds $6.14B estimates.

Earnings are now expected to be between $0.77 to $0.82 per share from $0.67 to $0.72 per share, with the current EPS guidance straddling guidance of $0.78.

MORE ON AMER SPORTS

* Amer Sports: I Remain On The Sidelines As Earnings Outlook Is Still Uncertain [https://seekingalpha.com/article/4791155-amer-sports-remain-on-sidelines-as-earnings-outlook-still-uncertain]
* Amer Sports: Unique Brands With Diversified Global Distributions [https://seekingalpha.com/article/4788828-amer-sports-unique-brands-with-diversified-global-distributions]
* Amer Sports Non-GAAP EPS of $0.06 beats by $0.03, revenue of $1.24B beats by $60M [https://seekingalpha.com/news/4486861-amer-sports-non-gaap-eps-of-0_06-beats-by-0_03-revenue-of-1_24b-beats-by-60m]
* Seeking Alpha’s Quant Rating on Amer Sports [https://seekingalpha.com/symbol/AS/ratings/quant-ratings]
* Historical earnings data for Amer Sports [https://seekingalpha.com/symbol/AS/earnings]