Amer Sports, which filed for an IPO in January, began trading on the New York Stock Exchange Thursday, raising about $1.37 billion. The retailer, which owns brands including Wilson Sporting Goods, Arc’teryx and Salomon, sold 105 million shares for $13, several dollars lower than the $16 to $18 share price range it touted a couple of weeks ago. The IPO puts its valuation at more than $6 billion.
“It's really important in terms of just access to capital,” Arc’teryx CEO Stuart Haselden told Retail Dive on Thursday, shortly after trading began. “This will help us reset the capital structure of the company. It'll free up more financial resources for us to put into our growth strategy. So that's like one of the primary reasons for the IPO. And I think it will naturally also just elevate the company and all of its brands as we compete for talent, as we compete for resources.”
Amer Sports said in its F-1 filing with the Securities and Exchange Commission that it intends to use the net proceeds from the IPO to repay all of its outstanding borrowings on its existing shareholder loans, and any leftover proceeds to repay a portion of the borrowings on its revolving facility.
Asked about the lower share price, Haselden said, “we're really focused on the long term, to be candid. We're happy that we're out and we feel like the stock is trading in a responsible way.”
“This is a durable company that has brands that have long legacies and pretty exciting growth prospects."
The sporting goods conglomerate has grown substantially over the last few years, recording $3.5 billion in revenue in 2022, up 16% from 2021. Revenue growth in 2021 was even higher, climbing 25% over 2020. Since 2019, Amer Sports has increased its net store count by nearly 70%, reaching 330 owned retail stores as of Sept. 30. Most of those locations belong to Arc’teryx and Salomon, which run 138 and 114 stores, respectively. For Arc’teryx, more store growth is on the horizon.
The outdoor gear brand opened 23 stores last year, with plans for slightly more than that in 2024, according to Haselden. The retailer will keep up that cadence “for the foreseeable future,” Haselden said, with the long-term possibility of hitting more than 500 stores globally. For the near future, more than half of its stores are planned for North America, which combined with China represents 80% of the brand’s revenue. Europe and Asia are also growth areas — Japan was the brand’s fastest-growing country last year — and Arc’teryx will open stores there as well as in Australia.
“This is a durable company that has brands that have long legacies and pretty exciting growth prospects,” Haselden said. “For Arc’teryx, specifically, we've seen just a very long runway of exciting growth. With our retail expansion in particular, we've got really exciting new store openings in almost every region where we operate. We feel like those store openings will be a sharp point of how we build the brand awareness.”
Leaning into direct-to-consumer channels is a big part of Amer Sports’ growth strategy. The company in its F-1 said an effective DTC strategy was “integral” to the growth of the business, but noted that it would take more capital expenditure to support the store rollouts across its brands. DTC accounted for 29.5% of Amer Sports’ revenue in 2022, up substantially from 2020, when that number was 21.7%. In the first nine months of 2023, DTC penetration was 27.2% and e-commerce penetration was 14.6%, with the company noting it has “significant runway” to expand digital penetration.
Haselden credits Arc’teryx’s DTC and store strategy with unlocking a new growth trajectory for the brand, and said it has the strongest direct-to-consumer capabilities of the Amer Sports portfolio. According to data firm Earnest Analytics, Arc’teryx’s DTC sales outgrew competitors like Patagonia, Nike and The North Face over much of 2023, with sales up almost 83% year over year in October.
Over the past three or four years, Amer Sports as a whole has doubled its business and Arc’teryx has more than doubled its business, Haselden said, adding that Arc’teryx doesn’t “see those growth algorithms changing.” Asked if Arc’teryx is profitable on a net income basis, Haselden said the brand has “very attractive margins that are best in class.” Amer Sports recorded a net loss of $252.7 million in 2022 and was projecting a net loss of as much as $234 million for 2023.
According to Haselden, being part of a conglomerate does come with benefits over stand-alone brands. The Amer Sports’ portfolio is able to pool demand for certain materials, like technical fabrics, nabbing better pricing as a collective than the brands would be able to achieve individually. Arc’teryx helps advise others in the group on real estate and store openings, and in return Wilson, Salomon and others offer up their own capabilities. Arc’teryx’s entire footwear offering up until now, for example, has been designed and developed through a partnership with Salomon, Haselden said.
That’s changing now, thanks to a footwear design and development center that Arc’teryx built in Portland, Oregon, a couple of years ago. Later this year, the brand will launch its first three models from that team. The move represents a dedication to the category, which is “an important anchor” for Arc’teryx during the summer months, when its cold-weather gear is not as relevant.
“Innovation in footwear helps us to grow more relevant in activities like hiking, trail running and climbing,” Haselden said.
As Arc’teryx looks toward growth, much of its strategy relies on augmenting what it already has. The women’s business, currently sitting at 22%, is a large focus point, with Arc’teryx planning to add more choices for that consumer and aiming for 40% penetration in the future. The company’s luxury sub-brand Veilance will get more investment as well. Rather than entering new spaces, Arc’teryx plans to refine what it has.
“I think we're in all the categories we want to be in,” Haselden said. “I think it's more about how do we develop our position and our execution and our product assortments within those categories to really achieve our full potential.”