Yahoo Finance Arc’tyrex, Salomon and Wilson: Bet on a Winning Trifecta of Billion Dollar Brands
Amer Sports, Inc. priced IPO Wednesday and begins trading Thursday on NYSE (ticker: AS)
Owns billion-dollar global brands: Canada’s Arc’tyrex, France’s Salomon and Wilson of the U.S.
Deal priced at $13 a share, market cap of $6.5 billion and enterprise value of $8.4 billion
Priced to perform, with valuation below 10x IPO Edge’s calendar 2025 Ebitda estimate
Steep discount to comps Lululemon Athletica Inc., Deckers Outdoor Corp. and Brunello Cucinelli S.p.A.
Fastest growing big brand is Arc’tyrex, maker of high-end jackets and other technical apparel, first designed for mountaineering
Arc’tyrex sales doubled in last 3 years, led by former Lululemon CFO/COO Stuart Haselden
Arc’tyrex commands a leading position in China, where sales are surging and margins are high
China averaged 60%+ annual growth since 2020 and accounts for 18% of company sales
CEO James Zheng, industry veteran, resides in China and company is backed by multiple Chinese investors and partners
Amer Sports is introducing Salomon and Wilson to China using the same playbook
Deal proceeds to help cut leverage, with net debt falling to roughly $1.9 billion from $5.9 billion, according to Gordon Haskett
Existing shareholders indicated they’d buy roughly 60% of the offering, a strong sign of support
By John Jannarone and Jarrett Banks
At last, the IPO market is emerging from a multiyear deepfreeze. Savvy investors should consider warming up with Amer Sports, Inc. and its red-hot portfolio of three billion-dollar brands.
Amer Sports priced 105 million new shares at $13 apiece in its IPO Wednesday night, raising about $1.4 billion. The company’s key brands include Canada’s Arc’tyrex, an elite outdoor apparel brand with roots in mountaineering, France’s Salomon, a leader in ski gear and footwear, along with Wilson of the U.S., known for providing basketballs to the NBA and tennis rackets to Roger Federer.
Arc’teryx is the youngest and fastest-growing of the company’s big three brands, founded in western Canada in 1989 catering to mountain climbers in harsh conditions. The company’s high-performance jackets, footwear and climbing gear have taken the world by hold, driving a financial performance that’s equally compelling to investors. Sales grew an annualized 31.9% from 2020 to 2022 and ripped 65.3% in the first nine months of 2023.
While the company started in climbing-specific gear, it has broadened to a wider array of mountain sports and beyond. A top seller is the shell jacket, which comes in many variations suitable for skiing, hiking or everyday use (think Lululemon’s expansion from the yoga studio to Sunday brunch).
Like Lululemon, Arc’teryx focuses on both craftsmanship and performance, helping attract a broader range of customers. Fittingly, the Arc’teryx brand is overseen by Stuart Haselden, former CFO and COO of Lululemon.
While Arc’teryx is Canadian, the most exciting region for growth is probably Greater China, where the brand has amassed a very large and growing following. Thanks mainly to Arc’teryx, Greater China sales have surged at an annualized 60% in the last few years, rising to 18% of total Amer Sports sales from 8% in 2020. Amazingly, sales per square foot in Greater China stores are nearly double those in North American locations.
Or course, some observers may ask about navigating the complexities and turbulence of the Chinese market. But Amer Brands should hardly be seen as an outsider trying to learn the ropes: CEO James Zheng resides in the country, where it has offices in Shanghai.
Amer Sports CEO James Zheng
There are plenty of other boots on the ground in China, including both partners and financial backers. China’s leading athletic-apparel producer, ANTA Sports is the largest shareholder with multiple board seats and also works as a partner in areas such as procurement. Other shareholders include Hong Kong-based private equity firm FountainVest Partners and Tencent Holdings Ltd.
Investors interviewed by IPO Edge say the Chinese backers, and their relationships in the country, set Amer Sports apart from other foreign brands that try to build a presence in China. And in a note to clients, Gordon Haskett points out that SharkNinja, Inc., which also has very significant Chinese ownership, has traded very well since spinning off last year.
Amer Sports is leveraging its China expertise to usher in more of its big brands, namely Salomon. The French brand is known for ski equipment and apparel, sold in resorts from Courchevel to Colorado, recently got more attention after its athletes won 28 medals at the Beijing Winter Olympics.
What skiers may not realize is that Salomon’s sales are now about two thirds footwear, consisting of hiking boots and other athletic gear. Those shoes are extremely popular in Europe and are gaining traction in both Greater China and North America, two enormous opportunities.
Wilson is the oldest of the company’s big brands, with storied partnerships including the NBA, NFL and much more going back over a century. Wilson is growing at a double-digit pace and has plenty of potential to gain from both the shift to DTC and global expansion.
The opportunity is especially ripe in China, which Wilson is in the process of entering. It can do so with the help of Amer Sports’ local resources as well as highly influential partners. The company plans to work with the NBA in China while also harnessing the rising popularity of other sports such as tennis.
Much of Amer Sports’ recent growth comes from sales in the direct-to-consumer (DTC) channel. In the technical apparel segment, which is mostly Arc’teryx, DTC share has risen to 62% from 45% in 2020. The shift to DTC, particularly e-commerce allows the company to keep close control on its brands while also expanding profit margins. The DTC playbook should again be deployed with Salomon and Wilson following the success of Arc’terxy.
Turning to valuation, Amer Sports looks like a deal. Assuming conservative growth estimates and a $13 share price, the company trades below 10 times 2025 Ebitda. Lululemon Athletica trades at 16.7 times consensus Ebitda for the same period, according to Sentieo, an AI-enabled research platform. Deckers Outdoor trades at 16.5 times and Brunello Cucinelli S.p.A. at 16.8 times.
After a rough couple of years, IPO investors are likely to expect the full package from high profile deals. With an attractive valuation, three powerful brands and many growth levers to pull, Amer Sports shares look ready to climb.
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