Earnings call transcript: Amer Sports Q2 2025 beats EPS forecast, stock gains

Amer Sports Inc. reported a strong second quarter for fiscal year 2025, significantly surpassing earnings expectations and prompting a positive market reaction. The company posted an earnings per share (EPS) of $0.06, compared to a forecasted loss of $0.02, marking a surprise of 400%. Revenue reached 1.24 billion USD. Following the earnings release, Amer Sports’ stock rose 1.77% in premarket trading, reflecting investor confidence in the company’s performance and outlook. According to InvestingPro data, the company’s stock has delivered an impressive 203% return over the past year, with analysts maintaining a bullish consensus recommendation of 1.57 (Strong Buy).

Key Takeaways

• Amer Sports reported a 23% increase in Q2 sales, with a notable improvement in gross and operating margins.
• The company raised its full-year revenue guidance to 20-21% growth.
• Successful product launches and strategic acquisitions contributed to strong performance.
• The stock saw a premarket rise of 1.77% following the earnings announcement.
• Direct-to-consumer sales grew by 40%, highlighting robust consumer demand.

Company Performance

Amer Sports demonstrated impressive growth in the second quarter, driven by a 23% increase in sales. The company’s adjusted gross margin improved by 250 basis points to 58.7%, while the operating margin expanded by 260 basis points to 5.5%. Key product innovations and strategic market expansions, particularly in the Asia Pacific region, contributed to this robust performance.

Financial Highlights

• Revenue: 1.24 billion USD, up 23% year-over-year
• Earnings per share: $0.06, compared to a forecast of -$0.02
• Adjusted gross margin: 58.7%, up 250 basis points
• Adjusted operating margin: 5.5%, up 260 basis points

Earnings vs. Forecast

Amer Sports significantly outperformed expectations with an EPS of $0.06 against a forecasted loss of $0.02. This 400% earnings surprise underscores the company’s successful execution of its growth strategies and indicates a strong recovery trajectory.

Market Reaction

Following the earnings announcement, Amer Sports’ stock price increased by 1.77% in premarket trading, reaching $38.17. This movement reflects positive investor sentiment, with the stock nearing its 52-week high of $40.21, indicating strong confidence in the company’s future prospects.

Outlook & Guidance

Amer Sports raised its full-year revenue growth guidance to 20-21% and adjusted diluted EPS guidance to $0.77-$0.82. The company anticipates continued growth in its Technical Apparel and Outdoor Performance segments, with projections of 22-25% sales growth.

Executive Commentary

Andrew Page, CFO, emphasized the company’s resilience, stating, "We are well positioned to manage through a variety of tariff scenarios." CEO James Zhang highlighted the rapid growth of the Solomon brand, noting, "Solomon is really spotty fast growing." Stuart Hazelton, CEO of Arcterix, added, "We feel like we’re just getting started," reflecting optimism about future market opportunities.

Risks and Challenges

• Supply chain disruptions could impact inventory management.
• Market saturation in certain segments may slow growth.
• Tariff and geopolitical tensions pose potential risks.
• Economic downturns could affect consumer spending in premium segments.
• Currency fluctuations may impact financial results.

Q&A

During the earnings call, analysts inquired about the company’s tariff mitigation strategies, the growth potential of Solomon in the U.S. market, and inventory management approaches. Executives also addressed the expansion strategy for their women’s business line, emphasizing its importance in driving future growth.

Amer Sports’ Q2 2025 performance highlights its strategic agility and market strength, positioning the company well for continued success.

Full transcript - Amer Sports Inc (AS) Q2 2025:

Conference Operator: Thank you for standing by, and welcome to the Amur Sports Second Quarter Fiscal twenty twenty five Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer Thank you. I’d now like to turn the call over to Omar Saad, SVP, Capital Markets and Investor Relations. You may begin.

Omar Saad, SVP, Capital Markets and Investor Relations, Amur Sports: Welcome, everyone. Thanks for joining AmrSports earnings call for the 2025. Earlier this morning, we announced our financial results for the quarter ended 06/30/2025, and the release can be found on our IR website, investors.omorsports.com. A quick reminder to everyone that today’s call will contain certain forward looking statements within the meaning of the federal securities laws. These forward looking statements reflect our current expectations and beliefs only.

They subject to certain risks and uncertainties that cause actual results to differ materially. Please see the Safe Harbor statements in our earnings release and SEC filings. We will also discuss certain non IFRS financial measures. Please refer to our earnings release for important information regarding such non IFRS financial measures, including reconciliations to the most comparable IFRS financial measures. We’ll begin with prepared remarks from our CEO, James Zhang and CFO, Andrew Page, followed by a Q and A session until approximately 9AM Eastern.

James will cover key operational and brand highlights, then Andrew will provide a financial review at both the group and segment level and also walk through our guidance for the third quarter and full year 2025. Arcteric’s CEO, Stuart Hazelton will join for the Q and A session. With that, I’ll turn the call over to James.

James Zhang, CEO, Amur Sports: Thanks, Omar. Amherst Sports strong momentum continues in the second quarter as our unique portfolio of premium technical brands continues to create wide space and to take share in sports and outdoor markets around the world. We remain confident in our ability to manage through higher tariffs and other near term macro uncertainties. We are also ensuring that we develop each of our unique brand for higher quality long duration growth. The recent settlement forward acceleration, Akerix continued momentum and the steady results from our equipment franchise position us well for another strong performance in 2025 and beyond.

In Q2, we delivered strong results across sales margin and EPS. We generate 23% sales growth or 22% excluding currency impact. And we also expand our adjusted operating margin by two sixty basis points. Our performance was led by very strong growth and the profitability in both outdoor performance and the technical apparel as well as a solid performance in ball and racket. Andrew will provide a more detailed update on our tariff exposure.

But I’d like to emphasize that I believe we are well positioned to manage through a wide range of tariff scenarios given our premium brands with pricing power, secular growth trends and relatively low U. S. Revenue exposures. As I mentioned, we believe Amherst Sports is a uniquely positioned company within the global sports and outdoor space. Several factors give me confidence for our near, medium and long term outlook.

First, we own a unique portfolio of premium innovation driven sports and outdoor brands. Second, Actoriox is a breakout story with leading growth and profitability for the outdoor industry driven by disruptive direct to consumer model. Third, Solomon sneakers have unique performance and the design position and the brand is experiencing a global acceleration, but it still has a small share of the global market. Fourth, Worsen and our winter sports equipment franchises have higher performance products and the leading share, but will deliver slower long term growth except for Western Software, which has significant long term potential. And the fifth, we have a strong differentiated platform in Great China, where we continue to deliver best in class performance across all three big brands.

Before I turn to over to Andrew, allow me to briefly recap key brand highlights from our three segments. Starting with technical apparel, which is led by our largest brand Carriage. Our Carriage delivered another quarter of broad based strengths across regions, channels and categories, especially footwear and women’s, which continue to grow faster than the brand overall. We are encouraged to see Technica apparel momentum continue in the direct to consumer channel, where we generate a very solid 15% Omnicom in Q2 despite facing the highest two year Omnicom comparison of 2025. Arcterus stores continue to be critical to the growth strategy, especially how we engage with local consumers and the community.

Arterix opened seven net new stores in Q2 with 12 opening offset by a closure of five legacy locations as part of our ongoing strategy to optimize the quality and the productivity of our store fleet. Actorix store expansion strategy includes of a mix different format ranging from multi level large scale alpha flagship stores to small format, very distinct mountain town shops. In EMEA, key new store location this quarter included our first apparel stores in Milano and Stockholm. In North America, we opened a new mountain power shop at a Banff Resort in Canada, which has been experiencing strong traffic since opening in April. It has been one of the top performing shops in the region.

Another proof point that Akeris can be relevant year round even in summer. We opened a new flagship in Vancouver on Robson Street, the best location in the city with excellent performance since opening in July. We are also very excited about our first store flagship opening in New York City in Q4, right on Fifth Avenue at Lockfeder Center, one of the highest traffic shopping locations in the works. In China, we opened our first brand stores in the iconic Panaceura Hotel chain in Beijing. The store represents our most elevated expression of the brand designed for top tier luxury shopping experiences.

For 2025, we continue to plan to open approximately 25 net new stores globally with the most coming in North America. Our store opening plan incorporates a similar level of gross new stores as in 2024, partially offset by the closure of certain outlets and other suboptimal locations. We believe a high quality retail network is much more important to long term success than chasing the fast paced store expansion. In Great China, we are focused on optimizing Akeris retail footprint rather than pushing new store expansion. This year, Akeris will have net store closure in Great China, including some legacy partner stores and the factory outlets.

However, Arterix will still meaningfully increase its presence in China with large format, high quality, more productive locations. Looking ahead to 2026, we are planning Akeris to have net store opening in China after years of rationalizing the store fleet in that region. Community engagement remains critical to elevating Actoris brand awareness. In July, we host the fourteenth Annual Actoris Academy in Chamonix, drawing thousands of participants from around the world to our climbing clinics and also drew strong sales to our local shops. Community engagement activities during Q2, including the fifth Actelix climbing academy in Langdale Valley in The UK and our All Rise climbing event in the San Francisco Bay Area.

Shifting to product, footwear continue to be a guest’s fastest growing category in Q2, growing faster than the brand overall despite comparing against triple digit growth last year. This spring, we launched the Doran LD4, an elevation of the most popular model made for long distance mountain running. We also launched the Vertex B, which is a mountain running shoe designed to climb through technical vertical terrain. Looking forward, Arcterix has an exciting pipeline for shoe launch in the 2025. And I continue to believe footwear will be a large and profitable growth avenue for Arcterus.

Women’s also continues great momentum in Q2 with double digit growth across all regions outperforming the brand overall. We see a big opportunity to serve women in the outdoor differently through clinical design and the performance. A great example of our design focus on women is the plaquier pant, which has continued to see explosive growth in Q2, stocking out quickly across store and e commerce. Octavity experiencing rising brand awareness and affinity with women in The US and Europe, as we have improved the fit, style and the functions. Moving to the Outdoor Performance segment, which delivered an outstanding quarter led by Solomon footwear and apparel.

Solomon brand momentum continues to accelerate across all regions with very strong momentum in both sports side and the performance side. By region, Solomon Softwood continued very strong growth in Great China and APAC, while growth in both EMEA and America accelerate meaningfully. Direct to consumer remained the fastest growing channel for the brand, including a 28% omni account with strength in both stores and e commerce. In addition to sneakers, Solomon’s apparel, bags, and socks are also experiencing great momentum, especially Solomon running best. Sports side is doing very well globally and continue to lead footwear growth.

The momentum of our first ever global footwear launch of the XT Whisper from Q1 continues into Q2, and especially resonating with younger female consumers. On the performance side, we are very pleased with our new AeroCry three running shoe, one of the best footwear launch in Solomon history, including traction in the run specialist channel. AeroClient three uses a form called OptiForm EVO, which we believe represent a disruptive new generation material, offering the runner a new level of refund and account for running on load or trail. In May, we launched our new gravel line, which offers consumers a more versatile than ever running shoe that performs great on various type of tearing from hot pavement to loose tearing in parks and on trails. While it’s still very small, our gravel line is seeing strong early response from consumers and the retailers.

Another key launch for the quarter was the X Ultra five, the latest update to our iconic X Ultra high teen boots, known for lightweight and the stability and upgrade technology. Originally, email is also experienced very strong consumer demand for Solomon sneakers with strong sell through reorders and the preorders driven by both performance and the sports style. In Asia, direct to consumer continue to be the critical growth channel for Solomon led by our highly productive Solomon compact shop format. We opened a 16 net new Solomon shops in Great China this quarter, including both own stores and the partner stores, bringing our total comp to 234. We are on track to reach approximately 290 Solomon’s shops in Great China this year.

And we believe Solomon has opportunity to go to several 100 locations over time. We recently opened our second Solomon flagship in Shanghai, a 7,300 square foot pinnacle expression of the brand located in the French concession district, known for its boutique shopping. The c level store offers a more immersed experience for consumers and has performed very well in its first month. In APAC, we opened a 10 new Solomon stores in Q2, five in Korea and five in Japan, including prime locations in the Milanoji neighborhood of Tokyo and the Songsi in Seoul. Overall awareness and the demand for Solomon footwear is rapidly growing across Asia.

In The Americas, we continue to lay the groundwork to support significant future growth and the Solomon Sulphur grow strong double digit in Q2. Our first U. S. Store in New York City continues to show incredible traction with our consumers and we plan to open three to four more in the Great New York area this year or early next year, as well as continue to expand our presence in key wholesale accounts. New locations this fall included Woodbury, Common and Williamsburg, Brooklyn.

We are also opening stores in Chicago and West Hollywood this year, and we are focused on San Francisco, Los Angeles and Miami in 2026. And from a wholesale perspective, Solomon is seeing growing demand across a variety of retailers, including IEI, North Stream and the run specialty shops. Lastly, as we continue to elevate Solomon’s brand awareness, we are excited about upcoming Milano Cortina Olympic where Solomon is a premium partners, outfitting all volunteers. This will be an especially important moment for the brand in its home markets of the Europe. Before I discuss Bo and Rackie’s highlights, let me cover the Wilson management transition.

As you saw on our press release, due duty has decided to step down as President and CEO of Wilson to pursue new endeavors outside the company. Our Group CFO, Andrew Page has been appointed Interim President and CEO of Worsen and the Board and Rackage segment, and will continue in his current role as Amosport CFO. The company has begun a comprehensive search for the next Worsen leader. We are grateful for Joe Doty’s thirty year of service at Worsen and wish him well as he begins a new chapter. His contribution has been critical to the brand success, especially the last six years as CEO.

Looking forward, I have full confidence in Andrew Page to lead Worsen during this transition, we are also continuing to execute his responsibility as Amherst Sports CFO. Now to the ball and racket segment. Ball and racket growth trend continued to be solid in Q2 with 11% growth given by strength in sportswear and racket sports. Our Tennis three sixty continues to resonate very well with consumers from performing racket to soft goods. On court, we are served by this recent win by 18 year old Canadian Victoria Embarko at the National Bank Open in Montreal.

She’s our first ever Wilson head to toe tennis three sixty athlete to win a WTA one thousand tournament. And it is now ranked in the top 25 of the world. With consumers, Wilson performance records continue to shine, including the successful launch, our larger federal classic collections this quarter. In BigBow, we are also experiencing strong response to our Vesper pattern. Western Softwares continued its excellent growth more than doubling in Q2 twenty twenty five.

We continue to see a strong response to the injured women’s tennis shoe, which was recently chosen as the best new tennis shoe by Women’s Health magazine. We also continue to excel in China and will open approximately 50 more Worsen, Tennessee 160 shops in China this year. In North America, the new Tennis three sixty concept store in the Dallas North Park Mall continues to perform very well. And we are excited about our new shop in Beverly Hills. And we continue to expand our 10,360 tests at Dick’s Sporting Goods and other retail partners.

Beyond the record sports, solid trends in baseball bat were offset by soft sales in gloves, in freight growth and the golf. Now, I will turn to over to Andrew.

Andrew Page, CFO / Interim Wilson CEO, Amur Sports: Thanks, James. I will discuss tariffs in more detail when I provide guidance. But I want to start by saying that we are very confident that our fundamental business momentum, diverse global footprint, clean balance sheet and strong brand portfolio with pricing power will give us significant flexibility to manage through a variety of tariff scenarios. More importantly, the inflection of Solomon footwear adds a strong second leg of growth to Arcterix’s already exceptional sales and margin trajectory, significantly elevating the long term value creation potential of our unique brand portfolio. Given our strong first half results and continued operating and financial momentum and despite higher tariffs than assumed in our previous guidance, we are raising our full year revenue and EPS expectations.

This updated guidance assumes the current 30% U. S. Tariff on goods from China and that the latest tariff rates on all other countries will stay in place for the remainder of 2025. Although the impact of higher tariffs to our ball and racket segment will be slightly higher than expected, given the mitigation strategies already underway across brands, we still expect negligible tariff impact to our consolidated results this year and beyond. Okay.

Let’s go through Q2 results. Amherst Sports grew sales 23% in Q2 on a reported basis or 22% excluding currency. The strong sales performance was led by outdoor performance followed by technical apparel, and ball and racket also continued to deliver solid growth in the quarter. By channel, the group continued to be driven by D2C, which grew 40% led by Solomon in Greater China and APAC as well as Arcterix globally. Wholesale grew 9% at the group level led by Solomon.

Regional growth was led by Asia Pacific, which increased 45% and China, which grew 42%. EMEA accelerated to 18% growth and The Americas grew 6% in Q2. The Americas deceleration was driven by normalizing growth in ball and racket and a tougher comparison due to the shift in wholesale shipments from Q3 into Q2 in 2024. Amherst Sports continues to achieve very strong growth in China, and there are several reasons why we are confident in our future growth opportunities in this important consumer market. Number one, our brands compete in one of the highest quality, fastest growing consumer segments in China, the premium sports and outdoor market.

The outdoor trend in China continues to be very robust, attracting younger consumers, female consumers and luxury shoppers. Additionally, our authentic brands are known for their expertise, quality and technical innovation, which resonates well with Chinese consumers and our brands are still small in China. Third and most important, we have a great team in China. Our deep expertise and unique scalable operating platform gives us a significant competitive advantage across the portfolio. Turning to profitability.

Adjusted gross margin increased two fifty basis points to 58.7% in Q2, primarily driven by favorable channel, geographic, product and brand mix, as well as by lower discounts compared to the prior year and partially offset by the headwinds in transportation logistics and materials. Adjusted SG and A expenses as a percentage of revenues deleveraged by 140 basis points and represented 54.7% of revenues in Q2. Outdoor Performance achieved SG and A leverage on very strong growth, which was offset by slight deleverage at Technical Apparel due to retail expansion and Ball and Racket due to ongoing investments in sportswear. Led by gross margin expansion, we generated a two sixty basis point increase in our adjusted operating margin from 2.9% last year to 5.5% in Q2. Note that we received $19,000,000 of government grants in the 2025, which were received in the 2024.

This benefited adjusted operating margin by approximately 150 basis points in Q2. Corporate expenses were $34,000,000 up from $25,000,000 in Q2 last year. D and A was $81,000,000 which includes $39,000,000 of ROU depreciation. Adjusted net finance cost in the quarter was $22,000,000 comprised of $30,000,000 of interest expense, partially offset by $8,000,000 of FX gains on the remeasurement of certain monetary assets. In the quarter, our adjusted income tax expense was $5,000,000 which equates to an adjusted effective tax rate of 12%.

A discrete item related to a return to provision adjustment benefited our ETR in Q2. Adjusted net income in Q2 was $36,000,000 compared to $25,000,000 in the prior year. Adjusted diluted earnings per share was $06 compared to adjusted diluted earnings per share of $05 last year. Now turning to segment results. Technical Apparel revenues increased 23% to $5.00 $9,000,000 led by Arcterix.

Growth was fueled by 31% D2C expansion, including a 15% omni comp, a solid result facing the toughest two year stacked comp comparison of 2025. Lower levels of outlet sales had a negative impact on the technical apparel omni comp as Arterix continues to shift more focus on full price sales and limiting online and in store outlet sales. The DTC momentum continues to be fueled by both new and existing consumers across all regions, channels and product categories. Technical Apparel wholesale revenues grew 4%, negatively impacted by a shift in shipments from Q3 into Q2 last year. Regionally, the Technical Apparel growth rate was led by Asia Pacific followed by Greater China, The Americas and EMEA.

All regions grew strong double digits. Technical Apparel adjusted operating margin declined 10 basis points to 13.9% as slight gross margin expansion and higher other operating income was offset by growing SG and A investments. Lastly, we recently entered into an asset purchase agreement to acquire substantially all of the assets and certain liabilities of Nelson Sports Inc, the exclusive distributor for Arteryx and Valence products in Korea since 02/2001. We expect the transaction to close in the 2025, after which the country will be operated fully brand direct versus a traditional distributor model. Korea is a large sport and luxury consumer market, still with strong growth potential for Arcterix.

Moving to Outdoor Performance segment, we saw revenues increase 35% to $414,000,000 driven by very strong performance in Solomon’s footwear, apparel and bags and socks. By channel, outdoor performance D2C grew 63% led by new doors and higher productivity across markets, especially Greater China and APAC. E comm is also growing across regions driven by higher traffic. Wholesale grew 18% driven by strong sell through and reorders in soft goods. Regionally, the outdoor performance growth rate was led by Greater China and APAC followed by accelerating growth in both EMEA and Americas.

As James alluded to, the popularity of Solomon footwear is inflecting globally, and we are well positioned to appropriately and fully develop this unique opportunity over time. We believe we have very significant growth opportunities in all three major consumer regions and have the right talent and team structure in place to take a meaningful share of the global sneaker market over time. For our winter sports equipment brands, while q two is by far the smallest quarter of the year, we have solid preorders for the upcoming winter season as we continue to take market share in skiing. We also see growth opportunities in both snowboarding and protective equipment. Winter sports equipment is expected to represent only 28% of the Outdoor Performance segment in 2025, down from 46% in 2022.

Outdoor Performance adjusted operating profit margin expanded seven twenty basis points from last year to 5.1% in Q2. Margin expansion was led by gross margin, thanks to positive channel, region and product mix as well as favorable product costs due to our footwear cost optimization initiatives. This margin expansion was also driven by SG and A leverage on very strong revenue growth. Before I get into the results of Ball and Racket, I’d like to thank Joe Doody and acknowledge his distinguished thirty year career with Ambris Sports and the Wilson franchise. Joe was instrumental in many key achievements of the brand, most recently growing the brand to over $1,000,000,000 in annual revenues and setting the stage for its next growth inflection driven by Tennis three sixty.

Now moving to results. Ball and Racket revenue increased 11% to $314,000,000 driven by soft goods and Racket Sports. We are pleased with the continued growth in ball and racket, but would caution that double digit growth is not sustainable long term, and we continue to expect ball and racket to grow low to mid single digits long term. By category, the growth was led by soft goods, which now represents approximately 15% of segment sales and also our racket sports franchises. We continue to see very strong momentum in Tennis three sixty across the globe, especially in China.

Golf, inflatables and baseball were all down slightly. Golf grew strong double digits in EMEA, but this was offset by lower sell in in The U. S. However, for H1 overall, golf had solid growth. The inflatables market conditions are challenging and the weaker baseball glove sales are offsetting growth in batch.

Regionally, the ball and racket growth rate was led by China, APAC and EMEA, while Americas was roughly flat. Ball and racket segment adjusted operating profit margin increased 200 basis points to 3.1% due to higher gross margin driven by favorable product, channel and region mix, which offset higher duties and slight SG and A deleverage on continued soft goods investment. Turning to the balance sheet. We ended the quarter with $640,000,000 of net debt. Using the midpoint of our 2025 adjusted operating profit guidance, our net debt to adjusted EBITDA ratio was approximately 0.6 times at the end of Q2.

Our balance sheet is in a healthy position to support our company as we navigate tariff and other external uncertainties. Looking forward, paying down debt which carries nondeductible interest remains an effective use of excess cash. We exited the quarter with inventories up 29% year over year, higher than our 23% sales growth, mainly driven by Arcterix. This higher inventory is primarily driven by three factors: one, early receipt of fall twenty twenty five merchandise, which included tariff mitigation tactics two, higher goods in transit from lower air freight usage, which means we carry the goods on our books much longer and three, FX translation from the weaker U. S.

Dollar. While we expect inventory growth to remain moderately elevated through the 2025, we are very comfortable with the quality of Arcteryx’s goods and expect to work it down and return to normal inventory growth rates as we progress through 2026. Driven by strong profit growth and disciplined working capital management, we generated $108,000,000 of operating cash flow in the first half. And for the full year 2025, we expect to generate solid operating cash flow growth from 2024 levels. Now moving to guidance.

We remain confident that we are well positioned to manage through a variety of tariff scenarios given our low exposure to The U. S, our high end consumer base, the untapped pricing power of our brand portfolio and our clean balance sheet and strong cash flow dynamics. And given mitigation strategies underway, we continue to expect negligible impact to our group P and L from higher tariffs in 2025 and beyond. For the full year of 2025, given the upside in Q2 and our continued momentum and despite a slightly higher tariff impact, we are raising our full year revenue and EPS expectations. This guidance assumes incremental U.

S. Tariffs on imports from China remain at 30%, Vietnam at 20%, Europe at 15% and rest of world at the latest rates. We are raising our 2025 revenue growth guidance from 15% to 17% to 20% to 21%, including an approximate 100 basis point benefit from favorable FX impact at current exchange rates. By segment, we are raising our Technical Apparel revenue growth guidance from approximately 20% to 22% to 22% to 25% including continued strong Omnicom growth. We are also increasing our Outdoor Performance sales growth expectations from mid teens to 22% to 25% and ball and racket from mid single digits to 7% to 9% growth.

We are raising our full year adjusted gross margin guidance from 56.5% to 57% to approximately 57.5%. And we’re also raising our adjusted operating margin guidance from 11.5% to 12% to 11.8% to 12.2%. By segment, we continue to expect an adjusted operating margin of approximately 21% for Technical Apparel. For Outdoor Performance, we are raising adjusted operating margin guidance from approximately 9.5% to 11% to 11.5. For Ball and Racket, we are maintaining our adjusted operating margin guidance of 3% to 4%.

Ball and Racket will experience a slight drag from higher tariffs in the second half because of a few factors. Number one, the termination of the steel and aluminum exemption under which Wilson Rackets and Bass previously fell. Number two, higher actual tariff rates in Vietnam and other sourcing markets than the 10% rest of world assumption we last guided. And three, some shipments of Wilson soft goods had unfavorable timing and were hit by the temporary 145 China tariff. We are now assuming full year net finance cost of approximately $105,000,000 and an effective tax rate of 28% to 30%.

The lower effective tax rate is primarily driven by higher profit generation from low tax jurisdictions as well as the discrete item in Q2 that I mentioned. Other operating income will be approximately $20,000,000 for the full year and net income attributable to non controlling interest will be approximately $10,000,000 We now expect adjusted diluted EPS of 0.77 to $0.82 versus our prior guidance of $0.67 to $0.72 which is based on $561,000,000 fully diluted shares outstanding. Also, we are assuming D and A of $350,000,000 including approximately $180,000,000 of ROU depreciation. CapEx is expected to be approximately $300,000,000 primarily to support new store expansion, ERP optimization and distribution and logistics investments. Turning to third quarter guidance.

We expect reported revenue growth for the group to be approximately 20%, which includes an approximate 150 basis point benefit from FX. We expect adjusted gross margin to be approximately 56.5% in Q3 and an adjusted operating profit margin between 1213%. Our net finance cost for the quarter should be between 30,000,000 and $35,000,000 and the effective tax rate should fall between 2830%. We expect adjusted diluted EPS of dollars to $0.22 per share. Our updated guidance implies slower growth in 2H than 1H.

However, as we’ve said before, should strong trends continue and better than anticipated demand materialize, we believe we will be well positioned to deliver financial performance ahead of these expectations. Lastly, before Q and A, we will be hosting our first ever Investor Day on September 18 in Vancouver at Arteryx’s headquarters, which will be webcast. Although we will provide a high level group update, the primary focus of the meeting will be a deep dive into the Arteryx brand and its many unique opportunities. With that, I’ll turn it back over to the operator for questions.

Conference Operator: Thank you. We will now begin the question and answer session. Your first question comes from the line of Matthew Boss from JPMorgan. Your line is open.

Matthew Boss, Analyst, JPMorgan: Thanks and congrats on another nice quarter. Thank you. So James, could you elaborate on the momentum that you’re seeing in the third quarter supporting the 20% outlook, speak to drivers of the growth inflection at Solomons and the accelerated back half opportunity? And then Stuart, could you expand on the raised expectations at Arcterix, maybe specifically trends you’ve seen third quarter to date relative to the second quarter 15% omni comp?

James Zhang, CEO, Amur Sports: Thanks, Matt. Okay. So based on the very strong Q2 results and we we see our growth momentum still carry on in in q three, and especially for Solomon footwear. Okay? So cross border as we as we just introduced to you guys our strategy work and especially our new products really resonate in the market.

And I I say, okay. So we created a very unique category we call the outdoor sneakers, which really give us a very strong competitive age in snake markets and especially for female consumer younger female consumer sectors. So we really created a wide space for us, and we see very strong growth trend for auto auto’s performance segment. And on the other side, I I also will say the Actorix also on the right track, And the momentum still carry on. I still would give you more detail elaboration on that.

So, I mean, we’re some 360 10 to 360 formats continue to work both. And the especially in China and Southeast Asia, we see a very clear growth pattern for our Wearsont Tennis 360. And in US, we also on the way to really test a different format in in the in the in the in the markets we’re sitting, and we also have a very good confidence to unlock the potential for our worsens ten three hundred sixty in in United States. So pretty much like this. Stuart?

Stuart Hazelton, Arcterix CEO, Amur Sports: Thanks, James. Yeah, Matt, outlook that we offered really reflects the trends that we’re seeing in the business across regions and channels. Specifically, as we look at the second quarter into the third quarter, total revenues, we had a wholesale shift last year that was headwind for us in the second quarter of this year and that was reflected in the wholesale sales increase that we had posted single digit. That’s a tailwind for us now as we go into Q3 this year as we lap an easier compare last year in the wholesale channel. Overall though, our direct to consumer business is very strong.

I would say the 15% comp that we posted, we feel really good about that. The comparison was a tough compare to last year. We’ve also seen a reduction in markdown sales. So our markdowns are down about 500 basis points in retail and about 100 basis points in e commerce. So much higher full price business, much healthier that benefits our margins.

So we’re seeing just strong underlying trends in our business. From a KPI standpoint. Traffic trends remain very strong, which is the KPI that is the driver of our revenue growth. And we have strong inventory position, as was noted, coming into the back half of the year. And what we’re seeing so far in the third quarter is very encouraging.

We’re seeing really strong initial sell through in the first few weeks of third quarter. So that connects to the guidance that we just gave.

Conference Operator: Your next question comes from the line of Brook Roach from Goldman Sachs. Your line is open.

Brook Roach, Analyst, Goldman Sachs: Good morning and thank you for taking our question. Can you speak to the next levers of growth at the Solomon brand following the recent inflection? How should we be thinking about the pace and magnitude of additional distribution point expansion in The U. S. Relative to your other key international regions both on an owned door and partner wholesale door basis?

Thank you.

James Zhang, CEO, Amur Sports: Yes. Thank you for your questions. And I first of all, Solomon is really spotty fast growing pattern and driven I mean, in the past two q, I mean, obviously, embedded driven by strong momentums in China and Asia Pacific together with the email. And in US, we are still literally, we are still on the way to build at the foundation. So we right now, we only got a one shop in New York City.

We plan to open four to five shops by the end of year to in New York, Chicago, and Los Angeles. And to further validate validate our so called Solomon compact shop format, which has been proved proven in China and Europe. So we have a very good confidence because in terms of the retail format and the product assortment, we already got a very solid base to support our US market. Meanwhile, we also continue to try to find a good way to strengthen our b two b business in United States. Especially, we are on the way to build a very strong partnership with the top accounts like IEI and North Stream.

And that will give us a good base to continue to see what the right model for us to accelerate our business in US. And we also, together with a very strong performance lines being introduced in the market, we also right now, we also try to find a good model in our running, especially in United States. So in summary, I will say we are still Solomon in US, we are still on preliminary stage. We are still underway to build out the foundations. But given the successful model we built up in Europe and China, we have a very high confidence to build a very strong business model for Solomon footwear in United States in the future.

Brook Roach, Analyst, Goldman Sachs: Great. Thanks so much. I’ll pass it on.

James Zhang, CEO, Amur Sports: Thank you.

Conference Operator: Your next question comes from the line of Lorraine Hutchinson from Bank of America. Your line is open.

Lorraine Hutchinson, Analyst, Bank of America: Thank you. Good morning. I wanted to get your views on pricing at each of the brands. What type of price increases are you embedding to mitigate the tariffs? And, what has the customer response been to those?

Unspecified Executive, Amur Sports: Yeah. Thanks, Lorraine. Yeah. With regard to pricing increases, I mean, we have across the brands, we would have leaned into some pricing increases in the Wilson brand. We talked about that a little bit earlier this year.

But as as far as Solomon and our and our Terex, we continue to, you know, acknowledge that we have untapped pricing flexibility that we will definitely lean into should we should we need to. But we’ve been able to navigate and mitigate, the tariff impact, without taking price thus far, in those other two brands. You know, with regard to the quant with, with regard to Wilson, for certain products it’s been approximately 10%.

Lorraine Hutchinson, Analyst, Bank of America: Thank you.

Conference Operator: Your next question comes from the line of Paul Lejuez from Citi. Your line is open.

Paul Lejuez, Analyst, Citi: Hey, thanks. Hey, Stuart, can you talk about how our stores are comping the full price stores versus how much of a drag you’re seeing on comp from the outlet stores? And then just separate inventory in terms of dollars versus units and if you can give any color as to places you might be too light, might be restricting sales versus any regions or categories that you might be a bit too heavy? Thanks.

Stuart Hazelton, Arcterix CEO, Amur Sports: Yes. Thanks, Paul. Yes, the comp store trends in our full price stores is robust. It’s probably a mid single digit drag on the overall comp based on the outlet sales declines that I mentioned. So we’re happy to see that shift happening.

We’re happy to see a stronger full price mix, even though it may weigh on the headline comp number. And from an inventory standpoint, in certain of our footwear categories, we’ve stocked up quickly, especially new models that we’re introducing where we’re still trying to find the edge of demand. The Clarkea pant that James had mentioned is a good example of that. We’re still chasing the market there. Much of our springsummer apparel line also we’re still painfully out of stock in a number of regions.

And so we really don’t know how high is high yet in that part of the business and it gives us encouragement for the springsummer period specifically. We’re in a good position, I would say, from a fallwinter as we head into as we’re now in third quarter. And what I had mentioned in terms of the trend quarter to date in the guidance that we had given. And I would further say, if demand continues to materialize, there’s the potential to outperform. And so we think we’re well positioned, nothing structural that would prevent us and we’re in a strong inventory position at this point.

That’s the most color we can give right now.

Unspecified Executive, Amur Sports: Yes. And Paul, this is Andrew. I would elaborate a little bit on the inventory as Stuart talked about and in our prepared remarks. Definitely comfortable with where we are with, inventory and, in fact, a bit encouraged that we’re able to get ahead of some of the, some of the floor sets that that Stuart had to chase in previous years. In addition, as we have started to optimize our supply chain, and get ahead of some of that, we’re taking, ownership of our inventory a bit earlier because we have less air freight and actually vessel freight.

So normalize that supply chain process, which is, again, I’m encouraged by the improvements that we’re making in our supply chain and encouraged by the fact that we’re going to get ahead of some of that demand that we’ve been chasing in previous periods.

James Zhang, CEO, Amur Sports: Got it. Thank you, guys. Good luck. Your

Conference Operator: next question comes from the line of Jay Sole from UBS Financial. Your line is open.

Omar Saad, SVP, Capital Markets and Investor Relations, Amur Sports0: Great. Thank you so much. Two part question. One, Stuart, just talk about the women’s business at Arteryx and how you’ve seen that develop over the last ninety days. And, Solomon, just with the super strong growth, you know, probably above what you talked about at the time of the IPO, what’s really gotten better big picture at Solomon that’s allowed you to deliver this big inflection and the big growth?

Omar Saad, SVP, Capital Markets and Investor Relations, Amur Sports1: Thank you.

Omar Saad, SVP, Capital Markets and Investor Relations, Amur Sports: We’ll start with Stuart on Arcterix and go to James for Solomons.

Stuart Hazelton, Arcterix CEO, Amur Sports: Hey Jay. Yes, thanks for the question. The women’s business we saw continued strength in the second quarter. Revenues in women’s was up over 30% in the quarter. We saw continued increases in our penetration, our mix of business.

So we’re pleased to see just the strength of our women’s business growing in importance, some explosive growth in certain models. James has mentioned the Clarkea. We also introduced recently a couple of new models, the NeoPant and the Ultera Croft Hardshell. They’re seeing fast sales out of the gate as well. So we’re excited to see women’s only specific models performing well as we expand the assortment for women’s.

This is an important sort of validation of the product strategy, while we’re seeing our core products continue to sell well also with our female guests. We really feel like we’re just getting started. So, more to follow and we look forward to sharing more, at the Investor Day in September, on women specifically.

James Zhang, CEO, Amur Sports: Hey, Jay. I I will highlight several key drivers to to make a Solomon at this stage grows so faster in the markets. Okay? So first of all, I will say, just mentioned it’s all coming from our unique product proposition. Okay?

So we make a very successful story on the category we call the outdoor sneakers, which many driven by our sports style business. Okay? XD Series. So and that that franchise really demonstrate very strong performance among the the the younger, I would say, and the female consumer sectors. So I think this give us a very unique angle to unlock the potential for the very highly competitive market.

And on this side, the product side, there’s also we consistently provide introduce the high performance running products in the market, which also receive extremely strong positive feedback from our b two b partners. And the also, the the the sales will also listed on the top in in in all the shops to the point of sales we are sitting. So that’s number one. The second one is the I think we also really build at a strong business model in China. You know?

Three years ago, we only got five shops. And today, by the end of the year, we we will have a close to 300 shops. All these shops are profitable and really give us a very strong confidence to drive the whole business at the right way. And these kind of direct to consumer channels built up also give us the chance to leverage overall brand awareness and also make the consumer understand what Zalem stands for, how they can get the the right level of service from our from in in the shop they are working. They are they are in in the shop environment they are they are in.

Okay? So I think it’s a it’s a quite amazing situation. And on your side, I will say the the overall I mean, strategic move on our b two b partners optimization, especially in Europe. Okay? We really build a very strong alliance with the top b two b retail the top retailers cross border in in in European markets and JD Sports, Fortlock, and and and they all the customer, they all give us a very strong very strong exposure in the shops and so that we we we can really deliver the result in the market.

So that’s the main drivers for soluble current high growth pattern in the market.

Omar Saad, SVP, Capital Markets and Investor Relations, Amur Sports0: Got it. Very helpful.

James Zhang, CEO, Amur Sports: Thank you so much.

Conference Operator: Your next question comes from the line of Laurent Vasilescu from BNP Paribas. Your line is open.

Paul Lejuez, Analyst, Citi: Good morning. Thank you very much for taking my question. Outdoor performance is implied to grow 20% in the second half. Can you unpack that a bit more? Any nuances between 3Q and 4Q revenues, especially heading into the Winter Olympics?

And then, Andrew, should we still assume that winter goods grows low single digits for the year? And then I have a quick follow-up on margins.

Unspecified Executive, Amur Sports: Last part of the question I missed the last part. The last part of your question? Second Yeah.

Paul Lejuez, Analyst, Citi: Winter good. Should it still grow low single digits for the year?

Unspecified Executive, Amur Sports: Winter sports equipment will continue to be, you know, a low single digit grower for the, for the rest of the year. The outdoor performance, implied, you know, 20% growth in the second half is, you know, it’s it’s pretty level between the third and fourth quarter. So there’s no, you know, no cadence that you need to build in that that we’re signaling.

Paul Lejuez, Analyst, Citi: Okay. Very helpful. In the last quarter, Andrew, you were very helpful providing a color around 1,000 basis point improvement in margins for the outdoor performance. I think 700 bps was from gross margin. Can you kind of give us that bridge for the 700 basis point improvement?

And then longer term, are there any structural reasons why this segment margin can’t get to mid teens over time?

Unspecified Executive, Amur Sports: Yeah. With regard to the gross margin improvement in the second quarter is primarily gross margin. And with regard to whether or not this business can get to you know, we’re gonna be obviously very competitive and you and you know what, as we continue to drive soft goods and and footwear you would expect this, this business to start their approach that the area that you’re talking about. I’m gonna give, a much a a longer term update on the margin profile of each of our segments when we come up at Investor Day. But you’re in the ZIP code.

Paul Lejuez, Analyst, Citi: Very helpful. Looking forward to Vancouver.

Conference Operator: Your next question comes from the line of Jonathan Komp from Baird. Your line is open.

Omar Saad, SVP, Capital Markets and Investor Relations, Amur Sports2: Yes. Hi. Good morning. Thank you. Stuart, just two follow ups if I could.

The outlook drag on comps for Technical Apparel or Arcterix, should we expect that to continue equally throughout the year? And then maybe could you frame up a little more the opportunity you see bringing the Korea business fully in house? And then just separately, Andrew, you raised the operating margin again. It was a little bit less than the raise to the gross margin rate. So could you maybe just share where you’re driving incremental investment and some of the payoff that you expect to see?

Stuart Hazelton, Arcterix CEO, Amur Sports: Yeah. Thanks Jonathan, Stuart. So the outlet drag, yeah, I don’t expect it will get worse than what we have seen in the first half of the year. There could be an opportunity for that to moderate to a degree, but probably more like what we’ve seen in the first half than not, if that makes sense. So probably more consistent into the back half than any change per se.

The Korea opportunity we believe is exciting. It’s an incredible outdoor market. We’ve had a strong relationship for a number of years with our partner there, but we believe we can invest in the business in a new way and really capture meaningful upside building on the strong start that our partner had created there. So we see upside for sure in Korea. We think it could be bigger than Japan even in terms of revenues and we’ve got a great start so far.

Unspecified Executive, Amur Sports: Hey Jonathan. Yes, really excited about the performance in the second quarter. And so think about it, you have really strong momentum as we go into the third quarter. We’re gonna seize this opportunity to continue to invest in the growth of the business. As you think about things like new store openings, marketing, you you know, you there was a previous question around around Solomon footwear growth and that inflection and continue to invest in that inflection, brand awareness.

And and with all of those key initiative investments, we’re still gonna deliver a 100 basis points of expansion to the bottom line. So, it’s thoughtful and it’s prudent and it’s responsible growth.

Omar Saad, SVP, Capital Markets and Investor Relations, Amur Sports2: Certainly, paying off. Thanks again.

Omar Saad, SVP, Capital Markets and Investor Relations, Amur Sports: Operator, we have time for one more question.

Conference Operator: Certainly. Your final question comes from the line of Michael Binetti from Evercore. Your line is open.

Omar Saad, SVP, Capital Markets and Investor Relations, Amur Sports1: Hey, guys. Congrats on a great quarter. Can I just ask, Stuart, it sounds like a few categories stocked out quickly and that’s not the first time, so good to see the demand there? I don’t know. It sounds like the drag to the outlets is is kind of the same through the year.

Could you just help us understand what we should expect for the evolution of that omni comp the rest of the year? Is mid teens a more consistent run rate from here? You also pointed to the high comparison a year ago. And then I guess just backing up, I know

James Zhang, CEO, Amur Sports: you guys don’t look at

Omar Saad, SVP, Capital Markets and Investor Relations, Amur Sports1: the business in geos, but maybe just unpack the 6% in The Americas there a little bit by brand and channel Give us a sense of whether that’s the right range to think about. I know there’s some categories like in ball and racket and maybe hard goods that mix higher in The U. S. But is that the right cadence to think about what we’ll see in that mid single digit range for the rest of the year?

Stuart Hazelton, Arcterix CEO, Amur Sports: Michael, it’s Stuart. I’ll take the first part of your question. So the omni comp for Arteryx, our comparisons get easier into the second half. And as I said, the underlying trend is strong. And so we and what we’re seeing in the first few weeks of Q3 is very encouraging.

We’re very pleased with the overall trends including our omni comps. And that’s reflected in the guidance that we had shared. So certainly see the trends in the first half from an omni count standpoint being something that we would see continuing at least at this level or higher into the second half of the year. And as I mentioned, strong inventory position, nothing structural that would prevent us from delivering upside should demand materialize.

Unspecified Executive, Amur Sports: Yeah. And, Michael, hey. This is Andrew. You know, just coming back to your your North American question. You know, again, really excited about what we’re seeing, especially with Arteryx and Solomon.

Strong double digit growth for both of them in North America. Where you see, you know, obviously, ball and racket is predominantly North America, and so there was slower growth in The US with ball and racket. You know, tennis three sixty continues to grow strong, and and we’re excited about that. We had strong results in rackets. Where you saw some slower trends were baseball, gloves, golf, and and inflatable balls.

We continue to do well with bats, but it was a little bit offset by by the gloves. And then the last thing is we do see some sporting goods retailers being cautious with regard to their ordering. And so that’s that’s driving a little bit of that, slowdown that you see.

James Zhang, CEO, Amur Sports: Andrew, can I follow that real quick? No.

Unspecified Executive, Amur Sports: No. And I guess, and then and then, Michael, the one thing the last thing that I wanna remember is that if we we pointed this out, Stuart alluded to it a

Andrew Page, CFO / Interim Wilson CEO, Amur Sports: little bit, that last year, you

Unspecified Executive, Amur Sports: know, we had a pull forward out of q three into q two for and and and that was wholesale driven. And so what happens is this is it’s a tougher comp this year. Excluding that pull forward, you would have saw a slight increase, in the current year. Yeah.

Omar Saad, SVP, Capital Markets and Investor Relations, Amur Sports: In the wholesale channel, excluding that excluding that drag, wholesale would have actually accelerated slightly overall at the group level.

Omar Saad, SVP, Capital Markets and Investor Relations, Amur Sports1: Okay. And I follow that with, the load the reminder about low to mid single digit growth long term on a ball and racket. Sounds like you’re feeling very good about the Tennis three sixty initiatives and a few things in past. Stores are starting to grow in China. Is there an obvious category that you expect to be persistently negative that would offset some of the emerging excitement I hear from you on on some of the initiatives there in ball and racket?

Unspecified Executive, Amur Sports: Yeah. I mean, the the the business is still nine well, ninety ninety, 85% equipment. That’s number one. Number two, it just really depends on the, velocity of our tennis three sixty. As James talked about, you know, we really found a a nice format in, in APAC and Greater China.

We’re still searching for it in the early stages of that format in North America.

Omar Saad, SVP, Capital Markets and Investor Relations, Amur Sports1: Okay. Thanks a lot. Appreciate it, guys. Thank you.

Conference Operator: And that concludes our question and answer session. I will now turn the call back over to management for some final closing remarks.

Omar Saad, SVP, Capital Markets and Investor Relations, Amur Sports: Thanks everyone for joining. Look forward to seeing you on the third quarter call in November. Have a great week.

Conference Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.

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