The parent company of the high-end outdoor brand Arc'teryx, Amalfen Sports, sprinted to the New York Stock Exchange for listing.
On January 4, local time, the official website of the U.S. Securities and Exchange Commission (SEC) showed that Amer Sports, Inc. (hereinafter referred to as "Amer Sports"), a global sports and outdoor brand group, has officially submitted F-1 documents, and Amalfen Sports also announced on its official website on the same day that it has applied for listing of common shares on the New York Stock Exchange with the stock code "AS", and the number and price range of shares to be issued have not yet been determined. In addition, Goldman Sachs LLC, Bank of America Securities, JPMorgan Chase & Co. and Morgan Stanley acted as joint underwriters.
Founded in 1950 in Helsinki, Finland, the company's wholly-owned subsidiary, Amer Sports Corporation, was previously listed on the Helsinki Stock Exchange in 1977 before being acquired by an investment consortium led by Anta Group in 2019 and delisted.
According to the official website, Amalfen Sports is a global iconic sports and outdoor brand group, with more than 10,800 employees around the world, business in 41 countries/regions, and products sold in more than 100 countries/regions. Amalfen Sports is mainly divided into three subdivisions: professional clothing, outdoor performance and ball sports. Arc'teryx, a high-end outdoor equipment brand, Salomon, a French mountain outdoor off-road brand, and Wilson (Wilson), an American tennis equipment brand, are the core brands in the above three market segments.
The brand of Amalfen comes from the prospectus
Among them, Archaeopteryx has always been known as the "outdoor top stream", and the average clothing price of the brand is 4,000 to 6,000 yuan, which netizens ridiculed as "the standard configuration of the middle class".
Arc'teryx contributed 30% of revenue, and did not achieve a turnaround after the acquisition and transformation
According to the prospectus, Amalfen Sports has been acquired by an investment consortium led by Anta Group in 2019 and started its transformation, and since then, Amalfen Sports' performance has accelerated.
Specifically, from 2020 to 2022, the revenue of Amalfen Sports will be 2.446 billion US dollars, 3.067 billion US dollars, and 3.549 billion US dollars respectively, with a total revenue of more than 9 billion US dollars, and the year-on-year revenue growth in 2021 and 2022 will be 25.39% and 15.72% respectively. The net losses were US$237 million, US$126 million, and US$253 million, respectively, totaling more than US$600 million.
Adjusted EBITDA was $311 million, $417 million, and $453 million, respectively, with year-on-year increases of 34.08% and 8.63% in 2021 and 2022, respectively. The gross profit margin was 47%, 49.1% and 49.7% respectively.
The performance of Amalfen in the past four years comes from the prospectus
In addition, in the first three quarters of 2023, Amalfen Sports' revenue increased by 29.9% year-over-year from $2.4 billion to $3.1 billion, gross margin increased from 49.4% to 52.2%, net loss increased by 9.1% year-on-year from $104.4 million to $113.9 million, and adjusted EBITDA increased by 61.3% year-on-year from $261.8 million to $422.1 million.
It is important to note that Archaeopteryx is not the largest contributor to the Amalfen's revenue.
The revenue of the three core brands in the first three quarters of last year accounted for more than ninety percent. Among them, Arc'teryx contributed revenue of US$941 million, a year-on-year increase of about 65%, accounting for more than 30% of the total revenue, Salomon revenue of US$949 million, a year-on-year increase of about 35%, accounting for more than 30% of the total revenue, and Wilson's revenue was US$866 million, a year-on-year increase of about 10%, accounting for nearly 30% of the total revenue.
In terms of channel construction, Amalfen Sports adopts a vertically integrated DTC model (Direct To Customer) and uses a wholesale network to establish its own retail distribution network around the world. The proportion of revenue in the DTC channel has been increasing, with 21.7%, 27.1%, 29.5% and 32.8% from 2020 to 2022 and the first three quarters of 2023, respectively. In addition, the e-commerce business of all brands of Amalfen Sports increased by 88% from 2020 to 2022.
2019 was a watershed year in the development of Amalfen. In 2019, a consortium of investors comprising ANTA Sports, FountainVest Capital, Anamered Investments and Tencent successfully acquired Amalfen Sports for 4.6 billion euros, with plans to transform Amalfen's business model, invest in brands, and expand overseas markets. According to the prospectus, the current shareholders holding more than 5% of Amalfen are still the above four companies.
More than 5% shareholding
Prior to the acquisition, Amalfen Sports operated with a matrix organizational structure, which limited the growth potential of the brand. In 2019, after the acquisition, Amalfen restructured and simplified the corporate structure, with the leadership team of each brand in three core divisions responsible for developing its own brand strategy and executing it end-to-end throughout the value chain. For example, Arc'teryx is aligned with the DTC channel strategy, and the Salomon and Wilson brands, which have traditionally been wholesale-based, have also increased their presence in the DTC channel while strengthening their wholesale partnerships.
In addition to adjusting its marketing strategy and channels, Amalfen has also continued to slim down, divesting the cycling brand Mavic in 2019, the health equipment brand Precor in 2021, and the smartwatch brand Suunto in 2022 through evaluation and optimization of product portfolio. According to the prospectus, the diversified brand portfolio strengthens Amalfen's competitive advantage in the sports category.
Amalfen's performance in Greater China continued to rise, and Arc'teryx contributed nearly 80% of its revenue to Greater China
"We believe that we are in the early stages of capturing the growth opportunities in Greater China as the Amalfen brand continues to be recognized by consumers in Greater China. Amalfen Sports stated so in the prospectus. After becoming a joint venture of ANTA Group, Amalfen Sports has continuously accelerated the penetration of the brand in Greater China, which has further boosted the continuous growth of performance in Greater China.
Among them, the proportion of Amalfen Sports Greater China revenue in total global revenue increased from 8.3% in 2020 to 14.8% in 2022, and increased to 19.4% in the three quarters ended September 30, 2023. According to the prospectus, it is believed that as brands continue to open retail stores and expand e-commerce platform channels, there is huge room for growth in Greater China.
During the acquisition in 2019, a senior executive of Anta Group pointed out that "as a listed company in Europe, after the acquisition of Anta Group, the biggest synergy effect of Amalfen is still in China, because all its brands are very small in China, but its brand genes are very strong, as well as its unique technology and influence, so we believe that through Anta's multi-brand management experience, we can make Amalfen's brand flourish in the Chinese market." ”
While other companies were facing challenges or business tightening, Amalfen Greater China saw significant growth. As of September 30, 2023, Amalfen had 63 Arc'teryx self-operated retail stores, 30 Salomon self-operated retail stores and a total of 67 Salomon distribution locations (including self-operated retail stores and partner stores) in Greater China, compared to 13 in 2019. For Wilson, Amalfen's recent role as the NBA's exclusive distributor provider and licensor of basketball has driven growth in Greater China, as well as sales of winter gear from Salomon and Austrian ski brand Atomic.
"Overall, Amalfen has been successful in Greater China. According to the prospectus, in terms of performance, Amalfen's revenue in Greater China increased from US$202.3 million in 2020 to US$523.8 million in 2022, with a compound annual growth rate of 60.9%, and the operating margin in Greater China exceeded the profit margin of the overall business. In 2023, revenue from Greater China continued to grow, with revenue of $593 million as of the first three quarters of 2023, a year-on-year increase of 67.6%.
The regional performance of Amalfen in the first three quarters of last year came from the prospectus
It is worth noting that Greater China is the number one market for Arc'teryx. In the first three quarters of last year, Arc'teryx Greater China achieved revenue of US$453 million, contributing nearly eighty percent of the total revenue of Greater China and accounting for more than forty percent of Arc'teryx's total global revenue.
The regional market performance of Amalfen's core brand comes from the prospectus
According to Amalfen, the initial success in Greater China was largely related to the growth of the Arc'teryx brand, which has followed the same strategy with the Salomon brand, which has seen a 72% increase in revenue in Greater China from 2021 to 2022.
In terms of senior management, Zheng Jie has served as the Chief Executive Officer of Amalfen since 2020 and will be appointed to the Board of Directors in connection with the offering. Zheng Jie is a veteran of ANTA Group, having joined ANTA Sports in 2008 and served as Group President and Executive Director before becoming CEO, and has also served as a Director of ANTA Sports since 2009. Ding Shizhong, Co-Founder, Chairman of the Board and Executive Director of ANTA Sports, will be appointed to the Board of Directors in connection with the Offering.
As for the overall growth strategy in the future, Amalfen mentioned in the prospectus that it will further penetrate the main market and strategically expand the market. In the field of professional apparel, Arc'teryx will build on its momentum in North America and Greater China to seek opportunities in Europe and the rest of Asia Pacific. In the outdoor performance segment, Salomon is relatively well-known in Europe, but brand awareness is significantly lower in Greater China and the United States, which also represents a strong growth opportunity in these markets. In ball games, Wilson plans to expand its leadership position in the North American market while driving growth in Greater China and Europe.
It is worth noting that at present, ANTA Group and Amalfen Group have formed a "two-wheel drive" global strategic layout. ANTA Group also mentioned at the Global Investor Conference in October 2023 that Amalfen Group will continue to strengthen the "three major markets" of China, North America and Europe, and promote the five "1 billion euros" strategy, so that core brands can establish a global leading position in their respective segments.
ANTA Group was founded in 1991 and listed in Hong Kong, China in 2007. In terms of the domestic market, the Group has been deeply engaged in four major brands, including the three high-end brands previously acquired by the Group, including the Italian high-end fashion sports brand FILA, the Japanese high-end ski professional sports brand DESCENTE, and the Korean high-end outdoor lifestyle brand KOLON.
From the loss-making state at the time of the acquisition in 2009 to the current revenue of 10 billion yuan, FILA has developed rapidly for more than 20 years, and the revenue in the first half of last year has even become half of the sky of Anta Group. Since its acquisition by the Group in 2019, the operating performance of the joint venture Amalfen Group has exceeded expectations, especially in the Chinese market, which has attracted much attention from the market.