Amer Sports (AS) Q4 2025 earnings review
A Breakout Year, But Salomon Investments Bite Into Margins
Amer Sports delivered a stellar end to 2025, with Q4 revenue surging 28% year-over-year to $2.1 billion. The top-line momentum is undeniable, fueled by Arc'teryx and a booming Salomon footwear business. However, the cost of this growth is becoming visible. To support Salomon's rapid expansion, management heavily accelerated SG&A investments, causing the group's adjusted operating margin to drop 110 basis points in Q4. Despite this near-term margin pressure, the company generated over $700 million in operating cash flow for the year and reduced net leverage to a mere 0.3x. Looking into 2026, guidance points to slightly decelerating but still highly robust double-digit top-line growth and a return to margin expansion.
🐂 Bull Case
Technical Apparel (Arc'teryx) grew 34% in Q4, paired with a stellar 16% omni-comp growth. Crucially, the segment expanded its operating margins by 160 basis points to 25.9%, proving its premium pricing power.
Direct-to-Consumer (DTC) sales skyrocketed 38% in Q4, now accounting for 55% of total revenue. Meanwhile, Greater China grew 42% YoY, defying regional macroeconomic gloom that has plagued competitors.
🐻 Bear Case
Outdoor Performance (Salomon) saw its Q4 operating margin collapse by 490 basis points to just 6.2%. The cost of marketing and SG&A required to push Salomon's softgoods into the mainstream is currently outweighing its sales leverage.
Inventories ended the year up 33% at $1.62 billion, notably outpacing the 27% full-year sales growth. While some of this is strategic early receipting to dodge tariffs, it presents markdown risks if demand cools.
⚖️ Verdict: 🟢
Bullish. The top-line momentum across premium outdoor categories is highly durable. While the margin hit at Salomon is a concern, it is a deliberate strategic investment funded by the cash-printing machine that is Arc'teryx.
Key Themes
Technical Apparel (Arc'teryx) Remains the Crown Jewel
Arc'teryx continues to defy gravity. In Q4, Technical Apparel revenue accelerated to 34% YoY growth, hitting the $1 billion mark for the quarter alone. Unlike Salomon, Arc'teryx is achieving this growth highly profitably—segment operating margin expanded 160 basis points to 25.9%. Strong traction in new categories like women's apparel and footwear, combined with disciplined full-price DTC sales, makes this the highest-quality earnings stream in the portfolio.
Salomon's Margin Collapse
A massive divergence has opened up between Salomon's top-line popularity and its bottom-line reality. Outdoor Performance sales grew a robust 29% in Q4, yet the segment's operating margin plummeted from 11.1% in 24Q4 to just 6.2% in 25Q4. Management explicitly blamed 'accelerated SG&A investment supporting key growth opportunities, particularly Salomon Softgoods.' Investors must question how long this elevated spend will last before structural leverage kicks in.
Greater China Shields Against Macro Headwinds
While many consumer brands flag China as a weakness, Amer Sports is utilizing it as a primary growth engine. Greater China revenue accelerated to 42% YoY growth in Q4 (up from 30% in Q3), reaching $544 million. The company's 'epicenter' store strategy and premium positioning insulate it from the broader value-seeking behaviors seen in the Chinese middle class.
Leadership Shakeup at Lagging Ball & Racquet
Wilson and the broader Ball & Racquet segment remain the weakest link. Q4 sales grew a relatively sluggish 14%, and the segment posted an operating loss of $8.6 million (a negative 2.6% margin). Recognizing the stall, management appointed Carrie Ask as the new Brand President and CEO of Wilson, replacing the interim lead. Her mandate will be to successfully transition Wilson from low-margin hardgoods into higher-margin lifestyle softgoods.
Inventory Growth Outpaces Sales
Inventories increased 33% YoY to $1.62 billion at the end of FY25, running hotter than the 28% sales growth in Q4. Prior transcripts noted management purposefully front-loaded fall inventory and shifted to ocean freight to mitigate tariff risks. While arguably a smart macro-defense, elevated inventory leaves the company vulnerable to markdowns if consumer sentiment shifts suddenly.
Macro Realities: Tariffs and FX
Amer Sports expects significant FX headwinds to persist into 2026, estimating a 500 basis point benefit from FX in Q1 that masks an otherwise decelerating underlying volume. Furthermore, while the company has downplayed tariff impacts due to low U.S. exposure (~26% of revenue), any escalation in trade wars could force the company to rely entirely on its pricing power to defend gross margins.
Other KPIs
Accelerating. DTC sales surged 38.4% YoY, far outpacing wholesale growth of 18.2%. DTC now represents 54.8% of total quarterly revenue. This channel shift is the primary reason consolidated gross margins expanded 160 basis points to 57.7% despite aggressive SG&A spending.
Stable and exceptional. The company ended the year with $652 million in cash and cash equivalents, pulling net debt down to $291 million. With an implied net leverage ratio of just 0.3x (down from 2.0x+ post-IPO), the balance sheet is pristine, providing massive flexibility for M&A, store build-outs, or future shareholder returns.
Guidance
Decelerating. After a massive 27% growth year in FY25, base effects are catching up. Management expects a more normalized mid-teens growth algorithm for FY26, inclusive of a ~200 basis point FX benefit. Technical Apparel and Outdoor Perf are expected to carry the load (18-20% growth), while B&R trails (7-9%).
Accelerating in absolute terms. Implies a healthy ~16% year-over-year earnings growth at the midpoint ($1.125) compared to FY25's $0.97. This signals management's confidence that top-line normalization won't derail bottom-line expansion.
Stable to slightly expanding. Compared to the 12.8% achieved in FY25, this represents a ~40 basis point expansion at the midpoint. Notably, management is altering its accounting by ceasing the allocation of $50M in corporate expenses to the segments, which will optically inflate segment margins next year.
Stable. The guide looks incredibly strong on the surface, but management explicitly noted this includes a massive ~500 basis point benefit from favorable FX impacts. Underlying constant-currency volume growth is closer to 18%, aligning with the full-year deceleration narrative.
Key Questions
Salomon SG&A Leverage Timeline
Outdoor Performance margins dropped nearly 500 basis points in Q4 due to SG&A investments. When exactly does management expect this elevated spending to normalize and begin providing operating leverage?
Wilson's Strategic Pivot
With Carrie Ask taking the helm at Wilson, what specific changes to the 'Tennis 360' and softgoods rollout strategy should investors expect to finally pull the segment out of negative margin territory in Q4?
Inventory Composition
Inventory grew 33% against 27% full-year sales growth. How much of this excess is strategic 'pull-forward' to avoid 2026 tariffs versus slower-moving items in the Ball & Racquet division?