Amer Sports

Amer's investor day focused on Salomon, positioning the brand as its next growth engine. The firm also extended its five-year guidance by one year to 2031, targeting a low-double-digit to midteens sales compound annual growth rate and adjusted operating margin expansion of 30-70 basis points.

Why it matters: The deep dive into Salomon has boosted our confidence in Amer's growth trajectory, underpinned by its multibrand portfolio. Salomon has become an icon in mountain sports, and its expansion in categories, geographies, and channels should support the group's future growth plan. Amer's growth target is attainable, in our view, given the surging popularity of mountain sports like trail running and its strong brand leadership in the category (Arc'teryx and Salomon). Plans to expand Salomon's product range and sales channel also provide clear runways. Beyond Salomon, Amer is also nurturing several niche brands with distinct positionings across multiple high-growth categories, including Wilson in tennis. These brands could emerge as the group’s next growth engines as Arc'teryx and Salomon mature.

The bottom line: We maintain our fair value estimate at USD 46 per share for narrow-moat Amer Sports. We see significant earnings growth potential from its multibrand portfolio and are confident in its ability to scale emerging brands. Shares look attractive at 15 times 2027 earnings. Amer's intangible assets moat source is strengthening with rising brand awareness and margin across its portfolio. The ongoing increase in direct-to-consumer, or DTC, sales mix should support further margin expansion and we expect operating margin to reach 19% by 2030, in line with premium sportswear peers.

Key stats: According to the company, the global total addressable market for head-to-toe running and outdoor sportswear is USD 300 billion. Salomon's target of reaching USD 3 billion in annual sales by 2028 would imply around 1% market share, which we think is achievable .

Although a substantial portion of Salomon’s recent sales growth was fueled by its sportstyle products that are susceptible to fashion risks, we believe the brand is still in the early stages of its fashion lifecycle. We believe rising brand awareness should help to maintain the sales momentum over at least the next two to three years. Moreover, trail running remains a fast-growing category in Asia, with a low penetration rate. For context, the estimated participation rate of trail running in China is less than 3% of the adult population, compared with over 5% in both France and the US. This provides Salomon with significant headroom for growth as a leading mountain sports brand.

We view Salomon's plan to increase the DTC mix thorough retail store and e-commerce expansion positively. We believe the rising DTC mix will strengthen its brand image and support higher margins. Moreover, the expertise accumulated from operating direct stores can be replicated across Amer's brand portfolio, supporting continuous margin expansion in the long run.

We also like the company's disciplined approach in expanding its wholesale channel. Salomon's premium brand image would be better protected in the long run by working with only premium wholesale stores, although it may lead to slower sales growth in the near term.

The recent weakness in Amer's share price reflects investor concerns over intensifying rivalry in sportswear, decelerating running footwear sales, and a potential shift away from athletic apparel. However, we believe Amer’s downside risk is protected by its limited reliance on any single product category, and robust brand equity across multiple attractive growth markets. As Arc'teryx and Salomon mature, the company's emerging brands should provide additional avenues for long-term growth.

Our discounted cash flow-derived fair value estimate is $46 per share, based on an 8.6% weighted average cost of capital.

We expect the group's future earnings growth to be driven primarily by sales growth and margin expansion. Over the next five years, we forecast a revenue compound annual growth rate of 17%, mainly attributable to the expansion of Arc'teryx, Salomon, and Wilson into lifestyle categories.

We project operating margin to expand to 19% by 2030 from 11% in 2025. Increased selling, general, and administrative spending associated with store expansion and amplified marketing efforts will be more than offset by robust sales growth and favorable mix shifts toward higher-margin products and direct-to-consumer sales channels. These factors underpin our expectation of a 31% CAGR in group operating profit over the next five years.

We assign Amer Sports a narrow moat rating, based on the intangible assets of its Arc'teryx brand. Despite contributing just one-third of Amer's revenue, Arc'teryx generates more than half of its operating profit. Our evaluation uses a set of criteria to assess sportswear brands’ competitive advantages: scale, visibility, pricing power, product quality, and control over distribution. We think Arc'teryx distinguishes itself with strong pricing power and exceptional product quality. Furthermore, it maintains a firm grip on its distribution and enjoys decent market visibility. These attributes collectively fortify its competitive edges and underpin our narrow moat rating, enabling Amer Sports to achieve a return on invested capital that exceeds its weighted cost of capital over the next decade.

Arc'teryx is a Canadian premium outdoor brand specializing in climbing and mountain apparel and holds a unique position in the sportswear industry. With outerwear constituting approximately 70% of its sales, the brand had an estimated 6% global market share in the outdoor apparel segment in 2025 and about a 15% share in the burgeoning Chinese market. These figures, however, likely understated its influence in the premium sector of the outdoor apparel market, where Arc'teryx positions most of its products.

Arc'teryx dominates its niche with high-quality products like its waterproof Gore-Tex shell jackets, and we believe the brand is poised for strong growth in the coming years. Weather resistance is becoming a baseline expectation for outdoor jackets, not a luxury, as people are increasingly seeking more sophisticated performance gear. Furthermore, outerwear is typically more durable, and consumers are more willing to invest in high-quality pieces. These attributes fit well with Arc'teryx’s positioning, and we believe it is well positioned to capitalize on this trend.

China is a good example of how this trend unfolded, with Arc’teryx’s sales more than quadrupling over 2020-25 despite tough economic conditions. This impressive growth can be attributed to three main factors: the rise of outdoor activities and winter sports, growing demand for wellness and balanced lifestyles, and the execution of a brand upgrade strategy after being acquired by Anta.

Brand equity is the major moat source for Arc’teryx, evidenced by strong pricing power and industry-leading margins. An Arc’teryx hardshell jacket can retail for $900, significantly ahead of competitors. This pricing makes Arc’teryx a status symbol, especially among those who view it as a less expensive alternative to luxury brands like Moncler. We estimate that Arc’teryx’s gross margin of roughly 65% in 2025 was significantly above the industry average. In addition, after adjusting for variations in distribution channels, Arc’teryx’s estimated retail gross margin is in the mid-70s, the highest among the sportswear companies we cover. These outstanding margins indicate that Arc’teryx’s premium pricing is not only driven by higher production costs but also by its brand premium.

We expect Arc’teryx to capitalize on its unique market position to maintain premium pricing and superior margins. Moreover, the brand is also well positioned amid the growing interest in outdoor activities, driven by a societal shift toward health and wellness. As urban dwellers seek respite from city life, spending on outdoor jackets is growing. This growth should allow Arc’teryx to maintain its premium pricing, supporting high margins despite competitive entrants in the coming decade.

Arc’teryx’s emphasis on direct-to-consumer, or DTC, sales helps to preserve its premium status and supports its narrow moat rating. Over 70% of Arc’teryx’s sales come from its DTC channel, compared with only roughly 40% for peers. Operating its own retail outlets allows Arc’teryx to maintain better price control, presentation, and marketing strategies.

In contrast, wholesaling, the predominant method of distribution in the sportswear industry, often leads to excessive discounting, as wholesalers generally prioritize short-term profits over long-term brand health. Although Arc’teryx still uses wholesale channels, its exposure is much lower than peers. This gives the company more control over pricing across channels, supporting its premium brand image.

We recognize the potential for competitors to challenge Arc’teryx, yet the likelihood of them overtaking Arc’teryx in the coming decade is low. Arc’teryx’s early entry into the market paved the way for brand loyalty and recognition, strengthening its competitive advantage. While brands like The North Face and Columbia can place the same emphasis on innovation and create products with the same level of quality, it will be challenging for them to build a premium brand image like Arc’teryx, given their long-term positioning as mass market brands.

Beyond Arc'teryx, we have not yet identified clear moats across the rest of Amer's portfolio, though this view could evolve as the brands mature.

Salomon delivers high-quality footwear for trail running and hiking with genuine technical credibility. That said, it is not as profitable as Arc’teryx and relies heavily on wholesalers (over 65% of sales). Despite the recent success, it has yet to develop an enduring competitive advantage that could support long-term excess returns, in our view. Similarly, Wilson and the other brands are even less profitable (operating margin below 10%) with even higher reliance on distributors (80% of sales). We do not see evidence of a moat in these brands for now.

While we believe Amer could maintain an edge over the coming decade, we lack conviction in its ability to defend this position over a 20-year horizon. Low switching costs and rapid innovation cycles of the sportswear industry make long-term outlook unpredictable. Furthermore, intensifying competition in the industry and potential shift in consumer preferences are both pressuring Amer’s long-term dominance.

With just 200 Arc’teryx stores worldwide at the end of 2025, the brand has a long runway for geographic expansion that could further accelerate revenue growth.

A favorable mix shift toward Arc’teryx, coupled with a growing proportion of direct-to-consumer sales, should drive further margin expansion.

Leveraging parent company Anta’s supply chain expertise, Amer still sees opportunities to optimize its cost of goods sold and further improve gross margins.

The sportswear and equipment market is flooding with competitors, many of which have large cash reserves and a strong supply chain for quick product development and geographic expansion, threatening Amer’s long-term market position and profitability.

Arc'teryx's reliance on its status symbol appeal poses a risk if consumer trends shift and negatively affect sales.

Several brands in Amer’s portfolio pull down others' good returns. It can also be hard to manage such a wide portfolio of brands, and some may need to be sold.