Text Pamela N danziger
Amer Sports closed at 13 per share on its first day on the New York Stock Exchange$40, although the company has lowered the opening price to $13 from the originally planned $16 - $18.
Amalfen owns an impressive array of sports brands, including outdoor high-end fashion apparel Arc'teryx (ARC'Teryx), sturdy winter sportswear brand Salomon, as well as iconic American sportswear brand Wilson and baseball brand Louisville Slugger (LS), but investors remain cautious about it.
Birds outdoor fashion. **courtesy of amer sports
CNBC reported that since investment banks have shown little interest in the company, according to the ** price and the company's 4With 8.4 billion shares outstanding, the market capitalization of Amalfen is approximately 64$900 million, down from the previous valuation of $8.7 billion.
It all depends on the market dynamics. James Zheng, CEO of Amalfen, said in an interview with Bloomberg after the market opened. "Over the past four years, we have built a very strong foundation. Internally, we still have a high level of confidence in continuing to grow the company. I would say that as a starting point, this ** is a bit frustrating, but I think it's just a short-term view. ”
An unbalanced balance sheet
Although the company's revenue grew from $2.4 billion in 2020 to $3.5 billion in 2022, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased from 3.$11.4 billion rose to $4$5.3 billion, but the company is still still not profitable, with a loss of $2 in 2022$5.3 billion.
The company expects a full-year 2023 loss of 20.4 billion to 2Between $3.4 billion, revenue is expected to reach $4.4 billion. In the first nine months of 2023, revenue increased by 30% compared to 2022.
CNBC's James Cramer has been blunt in saying that despite his admitting that he likes Amalfen's brand, he is bearish on the stock because the company is saddled with $2.1 billion in debt.
So far, this looks like another unpopular IPO. I would say that Amalfen is a good example of a trade that I wish I would never have again. He also added that the company's balance sheet was "less than ideal".
Finland-based Amalfen was acquired in 2019 by a consortium led by China's Anta, Tencent, FountaInvest Partners and Anamered Investments, founder of Lululemon founder Chip Wilson.
Zheng Jie previously served as President of ANTA Sports, and prior to that held senior management and sales positions at Adidas, Reebok and Procter & Gamble.
Regional opportunities
At present, Amalfen operates in 41 countries and regions, and its products are sold to more than 100 countries. However, in terms of the geographical distribution of income, China accounted for only 15% of its income, while the Americas accounted for the vast majority (42%) in 2022. In addition, the popularity of brands varies greatly from one region to another.
In the first nine months of 2023, about 70% of Wilson Sporting Goods' nearly $900 million in revenue came from the United States. But it generates only 5% of its revenue in China.
Given the popularity of American sports brands like Nike in China, Wilson also has a lot of potential in China, as it provides necessities for tennis, baseball, football, and basketball players.
In addition, Amalfen's other two flagship brands, Arc'teryx and Salomon, also have a long way to go in the Americas. In the first three quarters of 2023, the Americas accounted for only 935% of $4.2 billion in revenue, accounting for 930% of $4.9 billion in revenue. The strongest performance for Arc'teryx and Salomon was in China (43%) and in Europe, the Middle East and Africa (58%).
Distribution model
Amalfen relies mainly on wholesale and retail partnerships, which account for about 71% of its total revenue. This is an advantage for sports brands, as serious outdoor and sports enthusiasts often seek the expertise of specialty retailers to guide their purchasing decisions.
All of the company's brands have invested heavily in retail partnerships. Wilson alone passed 150,000 retailers for distribution, among which DICK'S and Academy are the main players. Salomon consists of REI, Eastern Mountain Stores, Ski Barn and Dick's sales. Arc'teryx is popular in Rei, Ski Barn and Nordstrom, with Nordstrom, although a high-end department store brand, considered Arc'teryx to be a performance brand with enough fashion credibility to be in its stores**.
In addition, Amalfen operates 330 self-owned stores, which currently account for 15% of revenue. In North America, for example, Arc'teryx has 48 full-price stores and 7 factory outlets, while Wilson also has outlets in New York and Chicago, and the Isville Slugger Museum and Store in Kentucky.
The remaining 14% of revenue is generated by e-commerce, which the company has identified as a particularly strong growth channel for Arc'teryx.
Strong brand portfolio
The company divides its 11 brands into three broad categories:
Professional clothing, led by Archaeopteryx, including Peak Performance. The segment generated $1 billion in revenue in 2022, a 15% increase from 2021. Outdoor sports brands, led by Salomon and including ski brands Atomic and Armada, and Enve, which serves the cycling industry. The segment's sales in 2022 were $1.4 billion, up 15% from 2021. The ball and racquet sports business, led by Wilson, includes ATEC baseball field equipment**, Evoshield golfer safety equipment, Demarini metal bats and the historic Louisville Slugger. This segment of the business brought in $1 billion in revenue, an increase of 18% over 2021. If the company can balance its balance sheet and effectively manage its brand and its distribution across geographies, it should be able to enter the winners' circle in the investment community just as it does in the stadiums, ski resorts and outlying areas.
Andrew Page, Amalfen's chief financial officer, shared with me ahead of yesterday's IPO: "No other portfolio in the world has such a broad portfolio of sports products spanning apparel, footwear and gear, as well as winter, spring and summer. ”
He concluded:"We serve participants in different sports. But a company like ours that has a portfolio of high-quality, high-performance products, we don't have a second one. ”
The author of this article is a Forbes contributor, and the content of the article represents the author's own views only. Translated from.