Amer Sports, Inc. (NYSE:AS) Q4 2025 Earnings Call Transcript

Amer Sports, Inc. (NYSE:AS) Q4 2025 Earnings Call Transcript February 24, 2026

Amer Sports, Inc. beats earnings expectations. Reported EPS is $0.31, expectations were $0.27.

Operator: Thank you for standing by. My name is Jay, and I will be your conference operator today. At this time, I would like to welcome everyone to the Amer Sports Fourth Quarter Full Year Fiscal Earnings Call. [Operator Instructions] I would now like to turn the conference over to Omar Saad, Head of Investor Relations. You may begin.

Omar Saad: Hello, everyone. Thanks for joining Amer Sports Earnings Call for the Fourth Quarter of Fiscal Year 2025. Earlier this morning, we announced our financial results for the quarter and year ended December 31, 2025, and the release can be found on our IR website, investors.amersports.com. A quick reminder to everyone that today’s call will contain forward-looking statements within the meaning of the federal securities laws. These forward-looking statements reflect our current expectations and beliefs only and are subject to certain risks and uncertainties that could cause actual results to differ materially. Please see the safe harbor statement in our earnings release and SEC filings. We will also discuss certain non-IFRS financial measures.

Please refer to our earnings release for important information regarding such non-IFRS financial measures, including reconciliations to the most comparable IFRS financial measures. We will begin with prepared remarks from our CEO, James Zheng; and CFO, Andrew Page, followed by a Q&A session until approximately 9:00 a.m. Eastern. James will cover key operational and brand highlights, then Andrew will provide a financial review at both the group and segment level and also walk through our guidance for the first quarter and full year 2026. Arc’teryx CEO, Stuart Haselden, Salomon’s CEO, Guillaume Meyzenq will join for the Q&A session. With that, I’ll turn the call over to James.

Jie Zheng: Thanks, Omar. Fourth quarter was a great finish to a breakout here for Amer Sports. Our growth was led by our flagship Arc’teryx brand and the rising star Salomon, which recently surpassed USD 2 billion sales mark. In 2025, we generated 27% revenue growth to $6.6 billion and 170 basis points of adjusted operating margin expansion to 12.8% with double-digit growth across all segments, regions and channels. In the fourth quarter, with gross sales 28% and the strong momentum continues into Q1. Our performance was led by technical apparel and outdoor performance with solid contribution from winter for the equipment and the [ boring ] record. All four regions achieved solid double-digit revenue growth. Although we generated solid gross margin expansion in Q4, adjusted operating margin declined 110 basis points.

This was entirely due to accelerated SG&A investments to support key growth opportunities, particularly for Salomon. Looking forward, we believe we are well positioned for strong and profitable growth within the premium sports and outdoor market, which continues to be one of the healthiest segments in all of consumers. Several factors give me confidence in our outlook. First, we own a unique portfolio of premium innovation-driven sports and outdoor brands. Second, Arc’teryx is a breakout brand with leading growth and profitability for the outdoor industry, driven by its disruptive direct-to-consumer model. Third, Salomon Footwear has a comparing and unique brand position but still only a small share of the global [ SNC ] market. Fourth, our Wilson and Winter Sports Equipment franchisees already have leading market position.

We’ll deliver slower long-term growth except for Wilson [ Westeros ] which has significant growth potential. And fifth, we have a strong differentiated platform in Great China where we continue to deliver best-in-class performance across brands. Before I turn it over to Andrew, I will briefly recap key highlights from our three segments, starting with technical apparel. Arc’teryx delivered another excellent quarter of broad-based strength across regions, channels and categories, especially footwear and women’s. Technical Apparel generated a very solid 16% of income, driven by strong full price growth and also healthy segment margin expansion year-over-year. Technical Apparel sales plus 34% was our highest growth quarter of the year. We continue to envision Arc’teryx as a [ jewelry ] global brand with significant runway in all major markets, and we’re encouraged that the brand is generating double-digit [ counts ] across all four regions.

[ Wim ] was a [ departing ] category in Q4 were 40% growth. We continue to enjoy rising brand awareness with women across regions as we improve bid-style, color function and annuities. We created a significant amount of [ newness ] in women’s this platform which drove notable incremental growth in key product categories. We saw especially strong momentum in ski and integration with the [ CMS ] and also the new [ Endesa ] down jacket, which is a warm [ on-roof ] de-jacket at a pinnacle price point. Women’s bottom also continued to be popular following the successful launch of the Clarke Ute and Nepes in 2025. Moving to footwear. — which grew nearly 40%, driven by strong growth in all markets. Top-performing models toward Northern ALDI the shoes, our most successful launch today, followed by the [ Cecotec ] hiking shoe, — looking forward, Actares has an exciting pipeline of 2 launched for 2026, and we continue to believe footwear will be a large and profitable growth avenue for Atari — our balance sub-brand is still small, but the growth strong double digit in Q4, and we are very excited for the future of this unique brands.

We enter a lot of interest at the Paris Fashion Week, with showroom [ on ] tripling from last year. We expect strong double-digit growth from variance in 2026 as we further develop our collections and expand distribution. [ Secularity ] and [ River ] continue to be at the heart of our brand. We opened eight new rebar centers in Q4, bringing the total to 43%. In Q4, we increased the credit net gas receive when they trade in used access products to 30% from 50% privacy, which has driven a notable jump in trading activity. I would also like to highlight recent initiative announcement at Arc’teryx. First, we welcome every [ Baker ], our first-ever Chief Brand Officer, who joined most recently from [ Palmhager ]. Every is stepping into a newly created enterprise-wide low that will bring together global marketing strategy as well as consumer experience, insight and analytics team.

We also welcomed [ Covia ] Private Darryl, our new Head of EMEA. [ Tobia ] brings more than 20 years of international leadership experience across EMEA and APAC most recent at [ Citi ] and Gucci. I would also like to mention peak performance, our other technical apparel brand, which delivered solid growth in Q4. 2025 market brands returned to growth with sales increasing across all region and channels. The brand also continued to improve profitability, driven by our concentrate efforts to reduce promotions and increase full price selling. Moving to the outdoor performance segment, which was led by another outstanding quarter from Salomon footwear and apparel and a solid performance from winter sports equipment. 2025 was a breakout year for the 79-year-old Salomon brand, which grew 35% to more than USD 2 billion of sales.

Salomon footwear momentum continues across all regions, especially Asia with high demand for sports [ tire ] and performance. There are several ongoing factors that give us the confidence that Salomon footwear is well positioned for significant profitable growth in the years ahead. Number one, global sports [ fire ] momentum continues. When of Salomon’s unique strength as an outdoor brand is that we are connecting with women and the younger consumer in our way traditional outdoor brand, [ Haven ]. Sports style is critical to Salomon’s position as the modern outdoor [ SNC ] brand. And the success of [ XT ] Whisper is the first example of how we can successfully expand [ spotty ] beyond the XT6 franchise. Second, our performance and the running lines are also having great success.

We continue to believe our new [ grew ] franchise is helping to unlock the loan category for Salomon like never before. Salomon is gaining traction in the run specialty channel in North America and EMEA and even China, which has been a sports-centric market is seeing strong traction in performance products. Third, Salomon is amazing branded in Great China and Asia, where we believe we operate the most productive and profitable [ SNC ] shops in the industry. In 2025, Salomon’s growth [ sales ] very strong double digits in — great China driven by both sports [ tile ] and the performance as well as strong growth in apparel. Beyond the Great China, teams experiencing certain demand in Korea and Japan, both large [ SNC ] markets. Fourth, our epicenter strategy is working.

Our strategy to open a handful of brand stores around strategic elevated wholesale distribution in key metro markets is critical to elevate Salomon’s presence and awareness globally. Epicentral cities include Paris, London, Shanghai, Beijing, New York, L.A., Milan and [ Motoco ]. Fifth is a strong pool demand we are seeing from consumers in Europe. Salomon’s home market, driving strong reorders, preorders and sell-through. For styles continues to be the growth driver, but we have also seen a real inflection in rival in Europe supported by marketing campaigns, in-store events and the running event activations. We are seeing especially strong performance in European epicenter like Paris and London, with strong double-digit [ ambition ]. Also, Salomon opened its first ever office and showroom in Paris, which is designed to elevate our brand presence in the city, strengthen our connection with buyers and the community, as well as support top talent acquisition.

Sixth is North America, which is still a much smaller sneak market for us compared to Europe or Asia. North America growth accelerate in Q4, driven by Sports [ Star ]. We remain focused on ramping up our North America direct-to-consumer footprint and the wholesale expansion with the key strategic partners. Early signs are positive as our North America order book is experiencing strong growth. Salomon is also making key investments in leadership. In January, we appointed our first ever creative director [ Hecky ] Salomon. [ Heck ] arrives following tenure at diesel and the most recently, MM6, and will lead both product design and the brand creative direction. [ Lastly ], I also want to mention our winter sports equipment franchise, which had a very strong Q4 despite challenging weather conditions.

The market remains healthy despite the low snow in certain regions. Bookings participations and the enthusiasm for ski and snowball are at record levels at this winter. The recent Milano [ Cortina ] Winter Olympic games were a big moment for AMR Sports Group, especially salable who upfit all 27,000 official staff and volunteers had too. Between salmon Actaris peak performance, Hamada and also appoint which is already 1 of the most successful [ PSCIraising ] brands in history. Our brand sponsored more than 200 assets at the game, winning an incredible 59 metals are dominant performance. Congratulations to our [ Sand ] teams. Moving to [ Boranda ], which had a strong sales grew 14%, driven by continued strength in softwood and return to growth in baseball and acceleration in golf.

[ Worten Softgoods ] continues its explosive growth summary in 2025, including very strong double-digit growth in Q4. Our [ Wessoftgoods ] offering is resonating with consumers in both wholesale and direct-to-consumer channels and across all major regions. Wilson is unique in its ability to offer Tennis assets from [ petite ], including racks and accessories, and we are excited to have signed 6 new Worten 1360 assets on to, including [ Woop10player ], Arixtra, bringing our total account to 16 players. Beyond pens, we also saw a return to growth in baseball. — driven by strong bet sales, led by the Louisville Slater and 5 other banks among the top 10 this season. Lastly, before I turn over to Andrew, I’m pleased to announce Carrie Ask as the next President and CEO of Western brands, effective March 1.

Carrie is a proven brand CEO and the seaside executive with great experience in the global soft goods, sports and auto industries, including Harry Hansen, Lewis and Nike. She began her career as an officer in the United States Navy serving both in the U.S. and abroad. We are excited to welcome Carrie to the Wilson and [ a ] sports team. With that, I will turn it over to Andrew. Thanks, James.

Andrew Page: We had another strong performance in Q4 with healthy sales growth, gross margin expansion and EPS despite our decision to accelerate investment behind Salomon. The strong sales and profitability of the Amer Sports portfolio allows us to accelerate resources behind the large Solomon sneaker opportunity while still delivering great results at the group level. Let’s first take a moment to reflect on the key highlights of 2025. Amer Sports Group delivered 27% growth in 2025 with broad-based strength across brand segments, regions, channels and categories. Arc’teryx continued its very strong trajectory. Salomon Softgoods entered rapid growth mode and Wilson Tennis 360 move the needle in our Ball & Racquet segment. We delivered meaningful adjusted operating margin expansion from 11.1% in 2024 to 12.8% in 2025.

We also continued to reduce our leverage ratio effective tax rate and annual interest expense, leading to strong operating and free cash flow generation. Now turning to our Q4 results. Amer Sports grew sales 28% in Q4 on a reported basis and 26% in constant currency. The strong group sales performance was led by technical apparel and outdoor performance, while Ball & Racquet also delivered solid growth in the quarter. By channel, the group continued to be led by [ DTC ], which grew 38% led by Salomon Softgoods. Wholesale grew 18% globally, which was led by Arc’teryx. Regional growth was led by Asia Pacific, which grew 53%, followed by Greater China, which increased 42%. EMEA grew 21% and the Americas generated 18% growth. Moving down the P&L.

Adjusted gross margin increased 140 basis points to 57.8% in Q4, primarily driven by positive segment, regional and channel mix shift. Adjusted SG&A expense as a percentage of revenue deleveraged by 220 basis points and represented 45.5% of revenues in Q4 versus 43.3% of revenues last year. The deleverage was primarily driven by outdoor performance as Salomon made the decision in Q4 to accelerate investments to support healthy long-term growth. Also, the strong growth of Wilson Softgood continues to drive elevated SG&A investment within Ball & Racquet. These factors were partially offset by Technical Apparel, which achieved SG&A leverage in Q4. Driven by the higher SG&A investments, as well as lower other operating income, our adjusted operating margin declined 110 basis points from 13.6% last year to 12.5% in Q4.

Corporate expenses were $40 million, up from $12 million in Q4 last year, driven by higher share-based compensation. In addition, last year in Q4, corporate expenses benefited from certain onetime accounting reclassifications related to net finance costs. D&A was $106 million, which includes $48 million of ROU depreciation. Adjusted net finance cost in the quarter was $21 million, which comprised primarily of $20 million of interest expense. In the quarter, our adjusted income tax expense was $65 million, which equates to an adjusted effective tax rate of 27%. Adjusted net income was $176 million in Q4 compared to $90 million in the prior year period. Adjusted diluted earnings per share was $0.31 compared to $0.17 last year. Turning to segment results.

Technical Apparel revenues increased 34% to $1 billion, led by Arc’teryx. Growth was fueled by both 37% wholesale growth and 34% D2C expansion. Technical Apparel generated a strong 6% omnicom, led by full-price selling as we intentionally pulled back our participation in key promotional events, including Black Friday and Double 11. Regionally, the Technical Apparel growth rate was led by Asia Pacific, Greater China, the Americas and EMEA. All regions grew strong double digits. Q4 was the first full quarter post the Korea distributor acquisition, which contributed a low- to mid-single-digit percentage to technical apparel’s growth rate in Q4. In Q4, Arc’teryx opened 15 net new stores with 21 openings offset by the closure of 6 legacy locations as part of our ongoing strategy to optimize the quality and productivity of our store fleet.

New store openings included the new Arc’teryx outlet store in Rockefeller Center in New York City and Mountain Town stores in Aspen and Park City. Arc’teryx also opened stores in Canada, Japan, Australia and China in the quarter. Looking back at full year 2025, we opened 24 net new stores, excluding the Korea acquisition, and we plan to open 25 to 30 net new Arc’teryx stores in 2026, with the largest number coming in North America and also China. Our store opening plan incorporates a similar level of gross new stores as in 2025, partially offset by the continued closure of certain outlets and other suboptimal locations. In Greater China, as planned, we had slight net store closures in 2025 which includes partner stores. However, we still grew our own store count and overall square footage in China by opening larger format, higher quality, more productive locations.

In North America, I want to highlight our second New York City [ Alpa ] store, which opened in October on Fifth Avenue at Rockefeller Center. The store is the most pinnacle expression of the brand in the U.S. and we are encouraged by the strong sales this winter. The newly opened Mountain town stores in [ Aspen ] and Park City are also off to great starts. We were very pleased by Technical Apparel strong operating margin expansion in Q4. Adjusted operating margin expanded 160 basis points to 25.9% driven by strong flow-through of revenue upside in the form of SG&A leverage. This is a great proof point behind our confidence in the scalability of Arc’teryx highly productive store model as they comp positively over time. Moving to our Outdoor Performance segment, which saw revenues increased 29% to $764 million, driven by very strong performance in Salomon footwear, apparel, bags and socks and also supported by strong double-digit growth in Winter Sports Equipment.

By channel, outdoor performance D2C grew 55% led by new doors and higher productivity across markets, especially in APAC and Greater China. Outdoor performance generated a 28% omni comp with strength in both stores and online. Wholesale grew 17%, driven especially by strong results in Greater China and EMEA Regionally, the outdoor performance growth rate was led by APAC in Greater China, followed by EMEA and the Americas. The popularity of Salomon footwear continues to inflect globally, and we are doing everything we can to ensure we are well positioned to fully develop this large opportunity over time. Salomon is positioned for significant growth in all three consumer regions, and we are working hard to build the right team, operational, go-to-market and brand-building functions to support our growth.

In Asia, D2C continues to be the critical growth channel for Salomon led by our highly productive Salomon compact shop format. We opened 33 net new Salomon shops in Greater China this quarter, including both owned stores and partner stores, bringing our total count a year in to 286 stores, adding nearly 100 new doors in 2025. In 2026, we expect to continue store expansion in Greater China, but at a more moderate rate, adding approximately 35 net stores to the fleet. In December, we reopened the Salomon flagship store in Chendu. The store design is inspired by local [ Sechin ] mountain scenery and it is the first flagship store combining winter sports and trail ready. In APAC, we opened eight new Salomon stores in Q4, including Japan, Australia and Korea.

The region finished the year with 113 Salomon stores, including partner stores with 44 net new openings in 2025. Overall brand awareness and demand for Salomon footwear is growing rapidly across Asia. In the Americas, Salomon’s Softgoods growth further accelerated as we continue to lay the groundwork to support significant future growth. We are excited to see very strong order books for both spring/summer and fall/winter for 2026 with growing demand across a variety of high-quality retail partners, including RAI, Nordstrom, JD Sports, run specialty shops and other specialty retailers. We also have improved our inventory position to answer the growing demand. Our brand awareness continues to rise across the Greater New York area as our shop in Soho continues to show great traction with consumers and we opened our second New York store in Williamsburg, Brooklyn in Q4.

The Williamsburg location strengthens our presence in the core New York Epicenter performing very well out the gate. Globally and in North America, we will continue to focus on our Epicenter Strategy in 2026 and beyond, particularly New York, Los Angeles and Miami. We currently plan to open 7 to 10 new Salomon shops in the U.S. this year. In EMEA, we continue to expand our store fleet and key episodes, including a third brand store in Milan and a fourth in London. And we will further develop our Europe epicenters into Spain, Germany and other key U.K. cities in 2026. For our Winter Sports equipment brands, Q4 was a strong quarter with double-digit growth despite lower snow levels in the [ ALP ] and the Rockies. In addition to strong market share in our core ski, boot and binding franchises, we continue to see incremental growth opportunities in areas such as snowboarding and protective equipment.

Moving to Outdoor Performance P&L. Adjusted operating profit margin contracted 490 basis points to 6.2% as Salomon made the decision to accelerate SG&A investments to support its significant growth opportunity in the global softgoods market. Outdoor Performance gross margin continued to expand, driven by positive mix shift across product, region and channel. This was more than offset by higher SG&A in Q4 driven by key investments to fuel Salomon’s long-term global growth. These investments include impactful marketing campaigns to drive long-term brand awareness, including XT-Whisper and gravel, the MECO Olympics-related marketing, Also, we accelerated retail expansion, especially in China, where we opened 25 net new brand stores in Q4. And Lastly, we increased investment in talent and operations, including higher incentive compensation given Salomon’s performance versus plan, new talent acquisitions, such as our new Creative Director, [ Endostim ], and opening Salomon’s new Paris hub.

I want to emphasize that we are seeing tangible benefits and high returns from our accelerated investments, including meaningful uplift in Salomon’s brand awareness since 2023, which has increased 15 points globally, including plus 15 points in Paris and plus 10 points in London. Moving to Ball & Racquet. Revenue increased 14% to $337 million, driven by soft goods, baseball and golf. We continue to see very strong momentum in Tennis 360 globally. By category, the growth was led by soft goods, up very strong double digits with continued momentum in all regions. Softgoods now represents approximately 15% of segment revenue. Racquets had slower growth in the quarter due to timing of product launches and wholesale shipments, while underlying demand remained strong, with double-digit growth 2025 was a great year for rackets, and we have exciting performance racket launches in 2026.

Baseball returned to growth driven by strong performance in bets, driven by successful product launches in fall of 2025 and golf ended the year with improved margins and solid growth, especially in EMEA and APAC driven by a strong product offering. In other categories, we saw inflatable stabilizing in Q4 and returning to slight growth following a challenging first 9 months. Regionally, the Ball & Racquet growth rate was led by China, followed by meaningfully accelerating growth in Americas, EMEA and partially offset by a slight decline in APAC. We had 10 new owned Wilson brand stores opening globally in Q4, split between Greater China and APAC. Wilson Tennis 360 shops are performing well in China, and we opened 13 new shops in Q4, including partner doors.

This brings the total owned and partner store count 77. And in 2026, we plan to open approximately 30 Wilson Tennis 360 shops in China between owned and partnered doors. APAC also continues to drive meaningful Wilson Softgoods growth. Our first store in Japan in Tokyo’s Marinucci District and two stores in Melbourne, Australia are off to great starts. In North America, improving Ball & Racquet growth was led by baseball and softgoods. In softgoods, we saw strong e-commerce comp growth in the region. Our expansion into warmer southern markets is continuing to drive strong results. Our Dallas NorthPark Mall continues to perform very well, and we continue to expand our new Tennis 360 concept store into more Southern and coastal locations including our new shops in Beverly Hills and Miami.

We also continue to expand our Tennis 360 60 offering into more [ Dick ] sporting goods locations, including House of Sports. Ball & Racquet segment adjusted operating profit margin improved 110 basis points to negative 2.6%, driven by solid gross margin expansion related to less promotional activity and better regional channel mix. This was partially offset by SG&A deleverage due to investments in softgoods. Now turning to the group balance sheet. Ending 2025 with $291 million of net debt and only 0.3x net leverage, our financial foundation has never been stronger. We generated $730 million of operating cash flow in 2025 compared to $425 million last year driven by strong profit growth and disciplined working capital management. Additionally, given our strong financial position, post year-end in January, we announced a redemption of $80 million of our outstanding $800 million, 6.75% senior secured notes at a redemption price of 103.

We ended 2025 with inventories up 33% year-over-year, slightly elevated compared to our 27% sales growth as expected. We remain very comfortable with the level and quality of our inventory. The higher inventory growth is primarily related to four factors. Number one, earlier of seasonal arctic merchandise to prepare for better in-stock position two, higher Arc’teryx goods in transit resulting from the greater use of ocean shipping versus airfreight. Three, FX translation from the weaker U.S. dollar and four, the addition of Arc’teryx Korea inventory following the recent acquisition. We expect inventory growth rate to normalize beginning in the second half of 2026 when we start to cycle our improved in-stock positions and the higher use of ocean freight.

A quick housekeeping item as we turn to guidance. Beginning in Q1 2026, we would discontinue allocating certain corporate expenses that are not directly attributable to the operating performance of our reportable segments. There will be no impact to our overall group adjusted operating profit margin it is simply reallocating certain costs from segments to corporate. For the full year of 2026, we expect group corporate expenses to increase by approximately 60 basis points or approximately $50 million related to costs reallocated from the segments. These cost reallocations to corporate will most benefit the outdoor performance and Ball & Racquet segment margins and have a much more muted benefit to technical apparel. Now turning to guidance. Guidance assumes the latest tariff rates on all countries will stay in place for the remainder of 2026 and beyond.

2026 is off to a strong start, and given the continued momentum from our highest-margin Arc’teryx franchise, accelerating solo and soft goods plus the solid foundation of our equipment franchises, we are confident in our ability to deliver another very strong financial performance in 2026. For the full year, we expect reported group revenue growth between 16% and 18%, which assumes a 200 basis point benefit from favorable FX impact at current exchange rates. We expect group adjusted gross margin of approximately 59% for the full year with the margin expansion continuing to be driven by mix shift benefits, as we said in the past, we are confident in our position to manage through a variety of tariff scenarios given our relatively low exposure to the U.S., strong brand portfolio with pricing power and clean balance sheet.

We continue to expect an immaterial impact on our group P&L from higher tariffs in 2026. We expect adjusted operating margin of 13.1% to 13.3% towards the low end of our long-term guidance of 30 to 70 bps of improvement, primarily due to the accelerating Salomon investment, opting for long-duration profitable growth over near-term profit flow-through. We are committed to investing behind the large growth opportunities in front of our Arc’teryx, Solomon and Wilson Tennis 360 while still delivering against our long-term financial algorithm. Our tariff size and profitability and our strong sales growth and gross margin expansion at the group level allow us the flexibility to invest behind Salomon and Wilson Tennis 360 in a way they could not as stand-alone entities.

We believe this is a unique advantage of our portfolio. Corporate expense is expected to be approximately $225 million, which includes approximately $50 million of costs previously allocated to the segments that I mentioned above. We assume full year net finance costs of $105 million to $110 million, higher than 2025 due to a normalizing FX impact on the revaluation of certain nonmonetary assets as well as higher imputed interest expense on store leases as our retail network grows. The effective tax rate is expected to be approximately 28%. And this is an increase from 2025 as we generate a higher percentage of our taxable income and higher tax jurisdictions and also as we cycle a onetime discrete tax benefit in the second quarter of 2025. We expect adjusted diluted EPS of $1.10 to $1.15, which is based on approximately 564 million fully diluted shares.

Also, we are assuming depreciation and amortization of approximately $400 million, including approximately $170 million of ROU depreciation. CapEx is expected to be approximately $400 million versus $310 million in 2025. The increase is mainly driven by increasing key investments in IT infrastructure and retail expansion. Turning to the segments. Our full year sales forecast incorporates 18% to 20% growth in Technical Apparel, 18% to 20% growth in outdoor performance and 7% to 9% growth in Ball & Racquet. For Technical Apparel, we expect adjusted operating margin of approximately 22%. We expect Outdoor Performance segment margin of 14.5% to 14.8% and we expect Ball & Racquet margin of 4.7% to 5%. All 3 segments should generate gross margin expansion driven by mix shift, partially offset by higher SG&A reinvestment.

While we don’t usually provide quarterly segment guidance, given the Q4 2025 margin fluctuation in outdoor performance resulting from accelerated Salomon investments, I want to provide a little extra margin color for Q1 2026. Although we will continue to invest heavily to support Salomon’s growth, we do expect outdoor performance to return to modest year-over-year margin expansion in Q1. Turning to first quarter guidance. We expect reported revenue growth for the group in the range of 22% to 24%, which assumes a 500 basis point benefit from favorable FX impact at current exchange rates. We expect adjusted gross margin to be approximately 59% in 1Q 2026 and adjusted operating profit margin to be 14% to 14.5%. Our net finance cost for the quarter will be approximately $27 million, and the effective tax rate would be approximately 28%.

We expect adjusted diluted earnings per share of $0.28 to $0.30. Lastly, I would note that should strong trends continue and better-than-anticipated demand materialize, we believe we are well positioned to deliver financial performance ahead of our expectations. With that, I’ll turn it back to the operator for Q&A.

Q&A Session

Operator: [Operator Instructions] Your first question comes from the line of Michael Binetti of Evercore ISI.

Michael Binetti: I appreciate all the help. A couple of technical ones for the model here. The fourth quarter gross margin is usually a little bit above third quarter in the past. I’m just curious because there’s a lot of moving parts here. Was there something structural that we should consider going forward in fourth quarter were any one timers in one of the segments that we should consider as we model going forward? And then I guess, Andrew, the Salomon investments in 4Q, it sounds like those are the reason for the margin — operating margin guidance in 2026 to be at the lower end of the long-term algorithm. So those investments in 4Q continue in the first quarter. Just curious, and maybe you could walk us through what some of the investments are in the first quarter?

And then bigger picture, as you think about the Salomon investments, incremental growth to the algorithm you presented, are the investments incremental to the algorithm that you’ve talked about with us? Or it sounds like there was at least an element of it being pulled forward. And I’m wondering if you’re stepping up these investments, is that means there’s an element of gating the margin expansion today because you can imagine a bigger brand revenue level for Salomon than what you’ve kind of talked about with us in the past?

Jie Zheng: Yes. A lot to unpack there, Michael. Happy to address a bunch of the [indiscernible]. Yes, I’ll go to address a much [indiscernible] as I think — as you think about the fourth quarter gross margin, one of the things that you talked about was the trend from third quarter to fourth quarter. Keep in mind that the fourth quarter, as you think about outdoor performance is our largest quarter for Winter Sports Equipment. Winter Sports Equipment actually outperformed as well in the fourth quarter. And so that is going to create a bit of a drag on gross margin. Obviously, strong business, but the fact is it’s a lower gross margin business. And when it outperforms, it affects it. The other thing that you also want to think about is on a comparative basis, recall that in 2023, we stood up a cost optimization program.

We started to see the impact of that cost optimization in outdoor performance in the back half of 2024. And so when you — as you get through and anniversary itself, so you stop in the fourth quarter 2025, you saw the anniversary of that cost optimization. So if you think about all of 2025, you saw a material margin expansion and outdoor performance and then anniversary itself because now you kind of reset the gross margin to its new go-forward perspective. As you think about your first question really around the Salomon investments. In the fourth quarter, given that we opportunistically made key investments behind strong momentum of Salomon. Over recent — over the recent years, we’ve had one big brand. Arc’teryx has been on fire, and we’ve made key investments behind that growth.

Now we have multiple high-return opportunities to invest in, especially as you think about the Salomon really inflecting right now. Also keep in mind, in Q1, you will see Salomon margins return to moderate growth. Again, Q4, we opportunistically made the right investments behind that accelerating momentum. The other thing is that this is the power of our portfolio. We run this what we call our brand direct office and because of that, we can get behind accelerating momentum in our brands in ways that these brands can’t do on an individual stand-alone basis. We continue to be committed to investing appropriately behind large growth opportunities in front of our tariff. Salomon, Wilson Tennis 360. And we’ll continue prioritizing long-duration opportunities over near-term profit flow-through.

The last thing I want to say about that is that the gross margin mix including outdoor performance, that continues. That mix benefit continues. Q4 — including Q4, Q4 had healthy gross margin mix shift and at the product region and the channel level. Full year op margin for the portfolio just recall 160 basis points expansion for the full year, and this is after consideration of the key investments that we made in the fourth quarter. So to wrap it up before I turn it over to Guillaume to give you some real color on it. Long term, we still expect to have SG&A leverage. So I’ll turn it over to Guillaume and he’ll give you some real key points on some of the discrete investments we made.

Guillaume Meyzenq: Yes. Good morning, everybody. So yes, maybe we can go a little bit more into details. We take this opportunistic decision to shoe Salomon long-term expansion in Q4. We have few — I have very few strong examples. [indiscernible] would take quitely to accelerate our positioning in the market. The first one is we are driving a few marketing campaigns in some key areas, supporting [indiscernible], which is, as James explained, we need to build a portfolio of key franchise products. And on the top of , we need to have kind of variety of product. And if [indiscernible] like really a very promising opportunity. So this is why we are pushing the same for gravel running, which is also our point of difference in the market.

And finally, also, we are preparing the [indiscernible]. So now you see the results. Certainly, you have seen the momentum we have been able to create during the sale biggest. And of course, it was kind of preparation [indiscernible] in Q4. On the top of that, we continue to have this retail expansion. We opened stores in China. In the quarter, you certainly mentioned what was happening in Los Angeles, where we opened this store in [indiscernible] and at the same time, we were building a campaign. So it’s how much we are building this ecosystem in every city where we open a store. We partner with our B2B partners. So I think about [indiscernible], for example, which are through presence in Los Angeles and then we are driving major and [indiscernible] to attract this consumer, and it was really successful.

So this type of model require also some resources at the beginning just to have it starts in the epicenter. The last one is about talent and operation investments. You just hear that Salomon was growing by 35% in ’25. And of course, we need to structure the company for a new scale and we had to support our cost incentive compensation, but also, we were starting to acquire some new talent acquisition, the example of 87 is a very good example of the level of ambition we put into Salomon. Another one was the opening of the Salomon Paris app. So we have a new office — you know that we are in base in [indiscernible], which is a kind of small city in the middle of the half, [indiscernible] well. But of course, the scale of the company requires also a little bit more facility in different places.

And Paris is very obvious. We are a company — a French-based company. So Paris was kind of obvious opportunity for us. And of course, it was requiring also this type of investment. It’s also a place where we can capture trends. We can capture also world-class talent in the future.

Unknown Executive: Okay. Michael, I’ll just wrap on the one point because I think the last one we talked about was there something structurally different about our algo. It’s not. Like I said, we delivered 160 basis points to the bottom line after that investment. Algo does and has consistently been 30 to 70 basis points plus on the bottom line. We opened this year with our guide at 30 bps. We believe that that’s responsible. It does not reflect a structural change in our investment — our investments as just highlighted, we will opportunistically get behind growth momentum while still continuing to maintain our earnings algo. It’s early in the year and should strong trends continue and greater demand materialize, we see no reason why we can’t outperform our guidance as it. I just want to clarify, 30 to 50 bps in the range.

Operator: Your next question comes from the line of Matthew Boss of JPMorgan.

Matthew Boss: Congrats on another nice quarter. So James, so James, following the breakout year that you cited for the portfolio, could you elaborate on the current momentum entering the first quarter? Maybe what opportunities do you see for the Salomon brand to accelerate market share further in ’26? And Stuart, have you seen any change in top line momentum at Arc’teryx relative to the fourth quarter or what’s embedded to moderate within the 18% to 20% full year forecast relative to mid-30s that we just see here exiting ’25?

Unknown Executive: Matt, we’re going to have Guillaume answer your question on Salomon. James will talk kind of global outlook for the space, including China, and then Stuart will finish [indiscernible] a remote on our tariffs.

Guillaume Meyzenq: So when we think about the momentum in sales of course, we see a very strong outcome. So ’25 was really the year we confirm that we’re doing in all regions. You see the traction in China and Asia Pacific, but our domestic market, which is Europe was really coming back strongly all the investments we have been doing in epicenter strategy with Paris, with London and now we are looking at Milano started it, of course, but we see that we have the right strategy in order to drive momentum in both sports tile and performance. And lately, we see also that U.S. is becoming a new place of growth. Of course, we are still quite small compared to the market, which is on one hand, a challenge, but also a great opportunity for us, but we see that we have early momentum in the sports tile category, you will see that this epicenter strategy in New York, L.A., we opened a store in Chicago as well, which is doing — performing very well.

And we see also that to data that there is some other good city where we start to pop up. And the last one is we have also in U.S. early signal of positive trend for running, thanks to [indiscernible]. And you can imagine that if we are able to combine sports [indiscernible] and running in U.S., then Salomon could have very promising growth.

Andrew Page: Yes. Matt, thank you for your questions. As I mentioned, okay, I still believe strong trends have continued each cross board. And you already gave out the guidance for our Q1 and top line will grow between 22% to 24%. So our three segments, basically, they all have very good forecast to achieve the target we set for them, okay? So it’s a pretty good trend for time being. And specifically, I just want to specifically mention about the performance in China during the Chinese New Year. So we see a very positive consumer trends during the Chinese year in our brands. And also, okay, not in our brands and also for the coal sports market overall, okay? So the consumption is very, very strong. And I think later on, you also will get a certain color from the other brands.

annual report, okay? So I think it’s a quite good movement for us. However, I still want to say, okay, still a bit too early for us to say, okay, this is a very bullish situation in China market. Okay. So — but at least we offer good start in 2026.

Stuart Haselden: Matt, it’s Stuart. So off to a fast start in the first quarter, really pleased with the trends that we’re seeing across all our regions. And we’re seeing especially strong momentum in North America over the last few weeks. So that’s contemplated in the guidance that Andrew shared. And then your question versus the 18% to 20% guide. What I would say is — this is consistent with our prior practices. We view this as responsible in terms of the guidance we’re offering investors — and there’s nothing structural that would prevent us from capturing higher sales should demand materialize. We’re well positioned, strong inventory position, as Andrew noted, to really convert upside should it materialize. So we’re happy with the trends we’re seeing and confident for the outlook for the — for 2026.

Operator: Your next question comes from the line of Paul Lejuez of Citigroup.

Paul Lejuez: If you could talk a little bit more about the wholesale expansion opportunity in the U.S. within the Salomon business and what sort of growth should we expect with Solomon wholesale versus DTC this year? And then, Stuart, also curious if you’re thinking about adding any new wholesale partner doors for Arc’teryx year? How should we think about growth there?

Unknown Executive: Yes. Thanks, Paul, for asking. So clearly, our strategy is about omnichannel. So we know that if we want to become a large [ secured ] footwear brand in the U.S., we absolutely need to partner with the key players. So we speak a lot about our D2C. We speak a lot about e-com because we think that this is where we can expand the best expression of Salomon, but of course, the strategy is really becoming omnichannel and partner with the key player. We have renew support with REI, which used to be our historical partner in the U.S. when we were very focused on winter sport equipment and outdoor. And now we see that we are back on track with them. And then in parallel, we have more strong JD Sport and most of the running specialists, which are today our current targets in order to drive the growth.

We — what we try to do so is not building a very big push, but things [indiscernible], city by city, having close partnerships, make sure that we have a very close partner good foundation of business. We are driving demand with them. And then we think that this is the best way to, first of all, win the ship share battle in the market but as well as expansion in terms of number of those. So we have this type of very accurate strategy in North America. The key driver at the end is really the consumer demand and how we partner with them to drive this consumer demand.

Stuart Haselden: Yes. Thanks, Paul. From an [indiscernible] standpoint, wholesale is emerging as an important channel for us across three of our key name strategies, footwear, valence and women’s and footwear this is an important channel of distribution different than apparel. So we see the need to have a stronger strategy here. We’ve been building a sales team as part of our footwear business unit in Portland. And we’re engaging with specialty run accounts, big box retailers as well. On the premium high end, I would say, very technical positioning that will be an evolution within our footwear business. For Valence, premium wholesale, Tier 0, as we call it, will help create higher brand awareness for Valence and just drive the business there.

And for women’s, we see it as an interesting expansion of our distribution footprint just to be relevant where she shops female guest shop. So across those three strategies, where we continue to evolve our wholesale strategy. So I hope that helps. Thanks.

Operator: Your next question comes from the line of Brooke Roach of Goldman Sachs.

Brooke Roach: At Salomon, I was hoping that you could unpack the proportion of growth that you expect to realize by region for the brand in 2026? And then if there are any specific regions that will receive an outsized SG&A investment this year. As a follow-up, how much of the growth at Salomon do you expect to come from existing distribution partners versus new distribution partners in 2026?

Unknown Executive: So we expect to have growth in all regions in the world. So clearly, we the very good and positive sign today is Asia Pacific and Greater China continued to show very strong momentum. But now, EMEA is really back on track, where I think every product EMEA also that we also qualify high-quality sales. So you know that sometimes in Europe, the price point is sometimes an issue, but we feel very good and what we have been able to build in the long run, so keeping quite premium positioning. And the last one, which is a good news, is North America, we’re definitely small scale today, but very high growth and high demand and especially from the last quarter, and we see that this momentum is really engaging for ’26.

The second one? Yes. So — so once again, it’s — there is a few areas where we can look at — so the existing distribution is growing with the momentum. We have, of course, a new kind of strategy in Europe and in U.S. because we enter also the sneaker market with sports style and [indiscernible], it requires some new type of doors. I just can name in Europe sport, for example, which was not a customer of Salomon 5 years ago and now it’s becoming one of the strategic partners. So we have as well new distribution and in Europe despite the fact that our numeric distribution is already very strong. And of course, in U.S., but I will — I will replace the same as I did for the producers. We are building distribution right now in U.S.

Operator: Your next question comes from the line of Ike Boruchow of Wells Fargo.

Irwin Boruchow: Thanks, Congrats, everyone. So obviously, revenue is solid, some questions this morning on the margin. Andrew, can we just dive in a little bit on the cadence of the investment you’ve got about 200 basis points plus of deleverage in Q1. But based on the full year, it does seem like you should start to be scaling the investments, especially in the ones you kind of talked to for 4Q. Can you just comment on that? Like does it seem like the business should be scaling and leveraging the expense base in the back half of the year, specifically in Q4? And does that kind of give us some visibility to scale in the out years and beyond?

Andrew Page: Also, one of the things that — one of the things that is probably embedded does not easily see, but Q1, as you — some of the deleverage is driven on a comparable basis, driven by the fact that Q1 last year in Ball & Racquet was a quarter with meaningful pull forward because of the threat that tariffs. That was on the horizon. So Q1 last year compared to Q1 this year. Q1 this year is more normal. Q1 last year at [indiscernible] so you saw more profitability. So it looks like a deleverage. But underneath that, as we talked about, both our tariffs and outdoor performers are performing well. You can see — and I talked about you see margin expansion for outdoor performance. It is — it’s much more of a quarter 1 over quarter one comp issue related to Ball & Racquet in the prior year. Is that helpful?

Irwin Boruchow: No. It is. But I guess my bigger question is about the pacing of the expenses into the back half. And are you planning to start scaling those as you exit the year? And because that might give us some better visibility into the SG&A leverage potential as you’re kind of exiting into fiscal ’27.

Andrew Page: Yes. Yes. I mean, like I said, in Q4 of 2025, we invested a lot. We invested opportunistically a lot in Q4 of 2025. So inherently, it would suggest that Q4 2026 comparative is going to be pretty easy.

Operator: Your next question comes from the line of Jay Sole of UBS.

Jay Sole: Great. My question is for Stuart. So just give us a little bit of update on how some of the initiatives around, say, the women’s and footwear has gone for Arc’teryx in the fourth quarter and which your outlook for this year? And also just with all the news on tariffs over the last few weeks, how has the landscape changed and how might impact the company?

Stuart Haselden: Yes. Thanks, Jay. It’s Stuart. On your second point there, tariffs, it’s more of a modest impact on our tariffs. It’s not nothing, but it is not influencing in any way how we’re pricing our products or operating the company, and we see it as an opportunity to take share from companies that might respond in that manner. So feel — we’re in a good spot from a managing of the tariff situation. As you — and then your other question, women’s and footwear, as James mentioned in the prepared remarks, saw a really healthy growth across both of those categories, both growing 40% in the fourth quarter. Women’s, continued strength across some of the new products that we introduced, the women’s-only products, the pant category in particular, has been really strong.

The Clarke, the Lucia and the [ Neopantare ] offering us a new sort of lever of growth within the women’s business. We also saw strength in our ski and insulation, the [ AMS ] and [ DSA ] down two new products that we introduced in the quarter performed really well. And we’re just excited to see women’s continue to grow faster than the overall company. We expect to see it exceeding 30% of the total sales of the company by 2030. And footwear, 40% growth in the fourth quarter as well. Top models included the Norvan LD4, that’s our top seller and fast sales in our [ Copechike ] shoe I also just mentioned, we’re going to launch the new silent on March 6. This is our Pinnacle trail running — so really excited about the evolution and the feature set there and the performance of so.

A lot of great feedback from it already from our athletes. And then within footwear, the business unit we’ve stood up in Portland. We’re excited for how that’s coming together, the sales team, the marketing capabilities we’re building. So very bullish on footwear. We see this as an important pillar of growth for us for some time. Hope that helps, Jay.

Andrew Page: This is Andrew. Just to wrap up a little bit on tariffs. At the group level, we’re confident, as I said, we’re confident in our position to manage through a variety of tariff scenarios given a couple of things, just remember, a low level of U.S. exposure, I’ve seen wrong brand portfolio and pricing power in our clean balance sheet. The two — obviously, the two businesses that are most impacted would be Ball & Racquet and want a sports equipment. And yes, while — I mean, we are aware of the recent Supreme Court decision and follow-up decision by the President to pose to 15% tariff. Looking at high-level scenarios, our position has not changed.

Unknown Executive: Okay. We have time for one more question. I know it’s the fourth quarter, so we’re taking a little bit longer time this quarter call.

Operator: Your last question comes from the line of Lorraine Hutchinson of Bank of America.

Lorraine Maikis: Andrew, now that the leverage is down to 0.3x. Can you talk a little bit about your expectations for the capital structure and uses of cash going forward?

Andrew Page: Yes. I mean — and you could see, you saw in 2025, you heard my guy, we’re talking about being approximately $400 million in 2026. So we still believe a high — a high return use of our cash and allocation is to grow our business from — to the point that we still believe that it is an efficient use of our cash to pay down the inefficient debt as it does not provide the requisite tax shield. But we are — we’ll continue to focus on that. We’ll continue to focus on the growth of our business. We’re continuing to focus on paying down inefficient debt. And we — we like our leverage position as it stands right now being close to zero.

Unknown Executive: That concludes our Q&A session. I’ll now turn the conference back over to management for closing remarks Thanks, everyone, for joining. We’ll see you in 3 months. Have a great spring.

Operator: This concludes today’s conference call. You may now disconnect.