Amer Sports, Inc.

Hello, everyone. Thank you for joining us and welcome to OMER Sports first quarter 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, please press star one again. I will now hand the conference over to Omar Saad, SVP of Investor Relations and Capital Markets. Omar, please go ahead.

Welcome, everyone. Thanks for joining Armour Sports Earnings Call for the first quarter of fiscal year 2026. Earlier this morning, we announced our financial results for the quarter ended March 31st, 2026, and the release can be found on our IR website, investors.armoursports.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. They 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 marks from our CEO, James Zhang, and CFO, Andrew Page, followed by a Q&A session until 9 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 we'll also walk through our updated guidance. Arc'teryx CEO Stuart Hazelden and Salomon CEO Guillaume Mazank will join for the Q&A session. With that, I'll turn the call over to James.

Thanks, Omar. Our excellent momentum continuing in Q1 as our unique portfolio of technical sports and outdoor brands are creating white space and taking share globally. All segments, geographies, and channels performed extremely well in the quarter, led by exceptional Solomon Softcoats growth, a strong Octelix Omnicar, and a solid Werson Tennis 360 growth. And we delivered strong results across the P&L, including 32% sales growth and 160 base points of adjusted operation margin expansion. All four regions achieved solid double-digit revenue growth, and that strong momentum has continued in Q2. Looking forward, given the continued broad-based momentum across our portfolio and the talent and ambitious teams we have in place around the world, we are very confident in the future outlook for Amherst Sports Group. Several factors give me that confidence. First, we own and operate a unique portfolio of premium innovation-driven sports and outdoor brands. These brands are still only small to medium size with significant room to grow globally. Second, Akerix is a breakout outdoor brand with leading growth and profitability for the industry driven by its disruptive direct-to-consumer model. Third, demand for Salomon's unique outdoor sneaker offering is inflecting globally. but the brand still only has a small share of the very large global sneaker market. Fourth, our Wilson and Wintersport equipment franchises have leading market positions, which we believe will deliver slower long-term growth, except for Wilson soft goods, which we believe is unique in the marketplace and has significant potential. And fifth, we believe we have a strong and differentiated platform in Great China and APAC, where we continue to deliver best-in-class performance across our portfolio. Before I turn over to Andrew, I will briefly recap key highlights from our three segments, starting with technical apparel. Acterix delivered another great quarter with broad-based strengths across regions, channels, and categories, including another exceptional performance from women's Strong momentum in the direct-to-consumer channel continued, driven by our 90% Omnicom. We continue to envision Octavius as a truly global brand with significant runway in all major markets. And we are encouraged that the brand is generating strong double-digit growth across all four regions, including a notable acceleration in North America. Women's momentum continue in Q1, growing faster than any other category for Acerix. Our confidence in the women's opportunity is rising as we are both, one, attracting new female consumers to the brand, and two, driving higher engagement and spend with existing female consumers. We really see brand affinity with women rising as we improve fit, style, and function while building expanded assortments, leveraging our unique design advantages. Our decision to redesign core ABCG models for her while also expanding feminine capabilities is working well. We also believe that success in bottoms with franchises like the Clark Hill, Luthier, and the Neopens is also helping us unlock the female consumers. On the men's side, we are excited to welcome a new Arc'teryx men's designer. Paxton Madison joined us most recently from Mountain Hardware in the North Space prior to that. His leadership will be instrumental as we continue to push the boundaries of our men's offering when it comes to solving problems for the mountain athletes with technical performance and a beautiful design. Footwear had another great quarter with strong clothes across region led by both existing styles and the new launch. Popular existing styles included Northern LD4 trail shoes, which has strong consumer affinity and is our biggest volume driver, followed by the Copic hiking shoe. And we launched the Silent 2 in Q1, which is a technical children's racing shoe. Looking forward, we are confident Octavius has an exciting pipeline of shoe release for the upcoming years. We are investing in our design capabilities and the commercial teams on the ground in the U.S., and building a strong infrastructure for both direct-to-consumer and wholesale channels. Our Valence sub-brand also had a strong double-digit growth in Q1. We expect 2026 to be a year of impact for the brand as we invest in units, further develop our collections, and expand distribution, all of which is creating excitement and engagement in the marketplace. Secularity and rebirth continue to be at the heart of Arcturus. In Q4, we increased the credit guests receive when they trade in-use Arcturus products, and this continues to drive strong triple-digit growth in trade in activities in North America, albeit of a small base. Our unmounted activities remain a critical role in community engagement. And the Mammoth Mountain Academy we hosted in February was again a great success with 22,000 attendees over the weekend and the 42 clinics hosted by Arcturus athletes. Academies are becoming a key platform for REBR, generating consumer awareness, interest, and the REBR sales. Peak Performance, our other technical apparel brand, delivered solid clothes in Q1. After the brand returned to clothes in 2025, the turnaround remains on track so far in 2026, with sales increased across key channels and regions. The brand also continued to improve profitability driven by concentrated efforts to reduce promotion and increase full price selling, especially in the Nordic market. Moving to the outdoor performance segment, which was led by another outstanding quarter from Salomon Softgoose. The investment we are making to grow Salomon brand awareness and the distribution footprint are paying off. As Salomon footwear momentum is expanding across regions, channels, and in both sport style and performance. We are also excited to share that we are seeing a clear acceleration in North America. as we leveraged rising brand awareness to expand distribution with both new and existing wholesale partners. We also saw solid performance from our winter sports equipment franchise, which continued taking share despite challenging market conditions. As you know, Salomon Footwear has become a very important growth engine, not just for Salomon, but for Amos Sports Group. We are excited to see a demand inflection for Salomon unique outdoor sneaker offering, especially since the brand still only has a small share of the global sneaker market. I'd like to highlight a few factors that give us the confidence that Salomon is well positioned to achieve its growth potential and do it in the right way. Number one, global sports style momentum continues. We believe Salomon is connecting with younger consumers and female consumers in a way traditional outdoor brands haven't. Sport style is critical to developing Salomon's position as the modern outdoor sneaker brand, including franchises such as XD6 and XD Whisper. Second, our performance and the running lines are also working well. We continue to believe our new Grindbox franchise is helping to unlock the run category for Salomon like never before. Salomon is gaining traction in the run specialty channel in North America and the email. Recent running launches include the S-Lab Phantom 3, which is an ultra lightweight racing shoe engineered for elite performance, as well as the AeroGlide 4 with Optic Form 2. Third, is Salomon's amazing brand in Guizhou, China, Asia, where we believe we operate the most productive and profitable sneaker shops in this industry. Guizhou, China, was Salomon's fastest growing region in Q1, driven by both sports style and performance, as well as strong growth in apparel. Salomon is also experiencing surging demand in Korea and Japan, both large sneaker markets. Fourth, Our epicenter strategy is working. Our strategy to open a handful of brand stores alongside strategic elevated wholesale distribution in key metro markets around the world is critical to elevating Salomon's presence and awareness. Our tier one global epicenter cities include Paris, London, Shanghai, Beijing, Tokyo, New York, LA. We have seen both rising brand awareness and accelerating revenue in our epicenter cities. Fifth, is the strong pull demand we are seeing from consumer in Europe, Salomon's home market, driving strong reorder, pre-orders, and the sales flow. Sport style continue to be the growth driver, but we have also seen a real inflection in gravel in Europe, supported by marketing campaigns, in-store events, and the running event activations. Also, we are seeing high e-commerce demand growth in Europe, even as we expand our retail and wholesale footprint. Sixth is North America, which is the largest sneak market in the world, but it is still a small business for us. In the US, we are seeing a clear growth inflection driven by sports style and performance. Not only are we expanding our shelf space and sales through existing wholesale partner doors, but we are also now starting to move Salomon footwear into key wholesale partners in the US. As you know, there's a strong demand for Salomon sneakers in the US, but still very limited distribution for consumers to find our products. Moving to ball and the rackets highlights. Ball and the rackets close 13% in Q1 driven by continued strength in soft goods and the racket sports. Our tennis 360 products continue to resonate very well with consumers, from performance rackets to tennis pair and footwear. And the Wilson soft goods continue its exceptional trajectory with very strong clothes across all three major regions. The Wilson brand is unique in its ability to outfit tennis athletes from head to toe, including rackets and accessories. We are pleased to see an increasing number of the world's top tennis players wearing head-to-toe version kits at key events, including Marta Koster, winning the Major Open, and the men's top 10 player, Alex Damina, at the India World. In Q1, we launched the version 10 of our iconic Braid racket. The launch of Braid has been well received in the markets across all channels. with reorders from key customers coming in already. We are also seeing strong validation of the break B10 on tour, with world number one Arena Sabalenka, who won in the awards, and the Miami Open playing with a breakout version of the new break before it was launched publicly.

With that, I will turn it over to Andrew. Thanks, James. Q1 was a great start to the year with strong sales, margin expansion, and EPS growth. The investments we've been making behind our biggest opportunities are paying off in terms of both sales growth and margin expansion. Today, we're experiencing exceptional trends across each of our three biggest growth engines, Arcteryx, Solomon Soft Goods, and Wilson Tennis 360, which are all still relatively small franchises with significant room to expand. Turning to our Q1 results, Amerisports grew sales 32% in Q1 on a reported basis, or 26% ex-currency. The strong group sales performance was led by outdoor performance and technical apparel. Ball & Racket also had impressive double-digit sales growth. By channel, the group continues to be driven by D2C, which grew 45% led by Salomon and Arcteryx. At the group level, D2C represented approximately 50% of revenue in Q1. Wholesale grew 21% led by Salomon. Growth was also very strong across all geographies. Regional growth was led by Asia Pacific, which increased 53%, and China, which grew 45%. AMAIA accelerated to 27%, and the Americas grew 18% in Q1. As it relates to our AMAIA region, I wanted to touch on the Middle East conflict. which thus far has had relatively low impact on our business. The region represents less than 1% of our global sales and the impact on both consumer demand as well as our supply chain and logistics operation has been immaterial thus far. We recently renegotiated our annual shipping contracts and this has also been incorporated in our latest guidance. That said, we continue to closely monitor this rapidly evolving situation, which could create some logistical and cost headwinds should the price of oil remain elevated longer term. Turning to profitability, adjusted gross margin increased 200 basis points to 60% in Q1, primarily driven by favorable channel, geographic, product, and brand mix. Adjusted SG&A expenses as a percentage of revenue increased 60 basis points and represented 43.2% of revenue in Q1. This is a better SG&A rate than what was implied in our previous guidance as we were able to leverage the higher sales growth against fixed costs. SG&A leverage in both technical apparel and outdoor performance was offset by deleverage in ball and racket due to ongoing investments in Wilson Tennis 360 and higher corporate expenses. Led by strong gross margin expansion, we generated a 160 basis point increase in our adjusted operating margin from 15.8% last year to 17.4% in Q1. Corporate expenses was $52 million, up from $27 million in Q1 of last year, mostly related to higher IT, personnel, and deferred compensation expenses. DNA was $103 million, which includes $50 million of ROU depreciation. Adjusted net finance costs in the quarter was $30 million, which comprised primarily of $25 million from interest expense, with the remaining $5 million driven mostly by FX losses associated with the revaluation and settlement of monetary balances. In the quarter, our adjusted income tax expense was $86 million, which equates to an adjusted effective tax rate of 28%. Adjusted net income in Q1 was $218 million compared to $148 million in the prior year. Adjusted diluted earnings per share was 38 cents compared to adjusted diluted earnings per share of 27 cents last year. Now turning to segment results. Technical apparel revenues increased 33% to $885 million led by Arcteryx. growth was fueled by 41% DTC expansion, including a 19% Omnicom. Technical apparel wholesale revenues grew 16%. Regionally, the technical apparel growth rate was led by Asia Pacific and Greater China, followed by accelerating growth in the Americas and EMEA. It gives us high confidence in the Arcteryx global growth trajectory that all regions continue to grow strong double digits. Stores continue to be central to Arc'teryx's growth aspirations, and we plan to open 30 to 35 net new Arc'teryx stores in 2026 across all markets. 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. We are planning 10 to 12 net new store openings in Greater China in 2026, with openings weighted toward H2 and Q4. After multiple years of optimizing the fleet, we are excited to resume new store expansion in this large and important consumer market. In Q1, we had 5 openings in China offset by 5 closures. Key new locations include the Grand Gateway 66 store in Shanghai. A great example of the benefit when we relocate from a 3rd floor location to the ground level. With much higher traffic and more premium locations amongst the luxury brands. In Q1, Arcteryx's growth accelerated in North America, and we delivered strong double-digit Omnicomps in the U.S. We are seeing significant progress in brand awareness in the U.S., with unaided brand awareness growing to 12% from 8% last fall, led by our top-of-funnel marketing strategies. We believe brand experience and community are still untapped areas for Arc'teryx to unlock higher conversion rates in the US market. And we will be doubling down on these activities in 2026. One new store worth highlighting is our latest San Francisco area location in Burlingame, which opened in March. It has performed very well so far and will play an important role in continuing to develop Arc'teryx in warmer markets. I also want to highlight our Rockefeller Center store where we are encouraged by the building sales trajectory over the course of this past winter. Also, our mountain town strategy continues to resonate as our new stores in Aspen and Park City got off to great starts despite low snow in the Rockies this past winter. Technical apparel adjusted operating margin expanded 250 basis points to 26.4%, driven by both gross margin expansion due to positive region and channel mix, as well as modest SG&A leverage on strong sales. Moving to our outdoor performance segment, which saw revenues increase 42% to $714 million, driven by very strong performance in Solomon footwear, apparel, and bags and socks. By channel, outdoor performance DTC grew 57%, led by new doors and higher productivity across markets, especially Greater China, APAC, and the Americas. Outdoor performance achieved a 29% Omnicomp with strength in both stores and e-commerce. E-commerce is continuing to grow across regions driven by higher traffic, especially in the Americas and APAC. Outdoor performance wholesale grew 34%, driven by strong sell-through and reorders in soft goods. Regionally, the outdoor performance growth rate accelerated across all geographies, led by Greater China and APAC, followed by the Americas and EMEA. The popularity of Solomon footwear continues to inflect globally. and we are doing everything we can to ensure we are well positioned to fully develop this large opportunity in the right way over time. Salomon is positioned for significant growth in all major consumer regions where 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 shops. we opened nine net new Solomon shops in greater China this quarter, including both owned stores and partner stores, bringing our total count at quarter end to 302 doors. For the full year of 2026, we now expect to open 45 net new stores in greater China, a slight increase from the 35 we communicated last quarter as more high quality locations have become available to us and our partners. Keep in mind, Although our net new store openings are slower than nearly 100 new doors the last couple of years, we are focused on upgrading the fleet by opening larger format, highly productive doors in the highest traffic shopping centers with more space to incorporate apparel and accessories. This is a very similar playbook to what we followed for Arc'teryx the last few years in Greater China. A great example of this is the new Salomon flagship we recently opened in Beijing's highest footfall shopping center, Chaoyang Hopsin 1, known for its premium, trend-driven retail. With over 8,000 square feet, the new flagship offers a full range of footwear and apparel and a highly elevated consumer experience. In APAC, another region where Salomon has experienced an explosive growth, we opened net five new Salomon stores in Q1. These were all in Japan and Korea, both very large and sophisticated sneaker markets. Salomon's overall brand awareness and desirability continues to grow very rapidly across Asia. In the Americas, as James mentioned, Salomon Footwear is seeing a material growth acceleration. The brand is seeing great D2C demand in both stores and e-com, and we are also excited to share that we are beginning to expand U.S. wholesale in a more meaningful way. Not only are we improving sell-through and expanding shelf space within existing wholesale partners such as Nordstrom and REI, we are also now starting to move Salomon footwear into key doors with new U.S. retailers like Foot Locker and JD Sports. There is growing demand for Salomon sneakers in the U.S., and we are strategically sequencing our U.S. wholesale rollout to align with our epicenter market strategy. Keep in mind this expansion into new wholesale accounts will include a small number of doors initially. Accordingly, we are seeing very strong North America order books for fall winter 2026 with growing demand across a variety of high quality existing and new retail partners. And we have improved our inventory position to respond to this growing demand. In terms of own retail in North America, we are further strengthening our presence in New York City and just recently opened a Salomon brand store in the Upper West Side of Manhattan. And in Q3, we will open a Salomon store in the Flatiron District of New York. We also opened our first Salomon shop in Mexico City as the brand is also enjoying accelerating awareness and desirability across Latin America markets. We will continue to focus on our epicenter strategy in 2026 and beyond particularly New York, Los Angeles, Miami and San Francisco. We currently plan to open 7 to 10 new Solomon shops in the Americas this year. In EMEA, we continue to expand our store fleet in key epicenters, and we will further develop our Europe epicenters into Spain, Germany, and other key UK cities in 2026. In Q1, we opened our first brand store in Copenhagen, Denmark, which has delivered a very strong positive start. Lastly, our winter sports equipment franchises had a solid Q1 despite challenging weather and market conditions. While the market for cross-country and touring remains pressured versus the COVID highs, the core alpine on-piste market remains healthy despite low snow in certain regions. Outdoor performance adjusted operating profit margin expanded 480 basis points from last year to 20.4% in Q1. The margin expansion was led by gross margin thanks to positive channel, region, and product mix, as well as SG&A leverage on strong growth. We are pleased to deliver strong margin expansion in Q1 after making the decision last quarter to accelerate investments to support Solomon's long-term growth, including marketing, retail expansion, and talent acquisition. We believe these types of investments are critical to deliver the kind of results we saw in Q1, as well as position the brand for high-quality long-term growth. I would add that We believe this is one of the advantages of our portfolio. The strong sales growth and margin expansion at the group level gives us the flexibility to invest behind early stage growth opportunities such as Solomon Sneakers and also Wilson Tennis 360 in a way they could not as standalone entities. Moving to ball and racket. where revenues increased 13% to $347 million, driven by soft goods and racket sports. We continue to see very strong momentum in Tennis360 globally. By category, the growth was led by soft goods up very strong double digits with continued momentum in all regions. Strong rackets growth was driven by China and EMEA. Beyond tennis, we saw solid growth in golf driven by commercial clubs and golf balls, while inflatables were slightly down. Baseball also declined, impacted by the timing of shipments in bats and gloves, partially offset by growth in baseball uniforms and apparel. Regionally, the ball and racket growth rate was led by Greater China, APAC, and EMEA. We opened one net new Wilson brand store in Q1 in Korea. We have extensive store opening plans for China this year, given the performance of existing Wilson Tennis 360 shops. For the full year, we now plan to open approximately 40 net new Wilson Tennis 360 shops in China between owned and partner doors. APAC also continues to drive meaningful Wilson soft goods growth. We are seeing strong growth in Korea retail, as well as in Australia in racket, golf, and apparel. In North America, we saw strong retail growth in Wilson soft goods offset by the timing of product launches in rackets and golf, as well as lapping some big sell-in programs and inflatables in baseball last year. We also continue to expand our Tennis 360 offering into more Dick's Sporting Goods locations, including House of Sports. We are planning to expand our Dick's footprint from 250 doors to 400 doors by the end of 2026. Ball and racket segment adjusted operating profit margin decreased 370 basis points to 3.6% as positive product, channel, and region mix was more than offset by higher SG&A as we made the decision to make key investments to support Wilson Soft Goods growth, including signing new tennis 360 athletes. Higher gross tariff and freight costs also negatively impacted margin year over year. Turning to the group balance sheet, we ended the quarter with $539 million of net cash and exited the quarter with inventories up 33% year over year, slightly higher than our 32% sales growth. We are very comfortable with the level and quality of our inventory. This higher inventory growth is primarily related to the same factors we previously disclosed. Number one, earlier receipt of seasonal Arcteryx merchandise to prepare for the better in-stock positions. Two, higher Arcteryx goods in transit resulting from the greater use of ocean freight versus air freight. Three, FX translations from the weaker U.S. dollar. And four, the addition of the Arcteryx Korea inventory following the recent acquisition. We expect inventory growth rates to normalize in the second half of 2026 when we start to cycle our improved in-stock positions and the higher use of ocean freight. Driven by strong profit growth and disciplined working capital management, we generated $172 million of operating cash flow in the first quarter compared to $164 million last year. And for the full year of 2026, we expect to generate solid operating cash flow growth versus 2025 levels. Now moving to guidance. A couple of housekeeping items before I walk through the details. First on tariffs, our new updated guidance today assumes that the higher IEPA tariff rates that were in place before the February Supreme Court ruling remain in place for Q2 and the remainder of 2026. Regarding tariff refunds, we have filed our submission and last week received a small portion of our total submission amount, which does not have an impact on our guidance as presented. Second, as we mentioned last quarter, beginning in Q1, we discontinued allocating certain corporate expenses to our reportable segments that are not directly attributable to the operating performance of the segments. There is no impact to the overall group-adjusted operating profit margin. It is simply reallocating certain costs from segments to corporates. included in our press release and the earnings deck is an exhibit that details the cost reallocation from each segment to corporate for each quarter of 2025. Let's begin with our updated full year 2026 outlook. The second quarter is off to a strong start and given the continued momentum from our highest margin Arcteryx franchise, Accelerating Solomon's soft goods growth plus the solid foundation of our equipment franchises, we have the confidence to raise our 2026 sales, margin, and EPS guidance. We are raising 2026 revenue growth guidance from 16% to 18% to 20% to 22%, which includes a 200 to 250 basis point benefit from favorable FX impact at current exchange rates. By segment. we are raising our technical apparel 2026 revenue growth guidance from approximately 18 to 20% to 22 to 24%. We are also increasing our outdoor performance sales growth expectations from 18 to 20% to 22 to 24%. Our ball and racket sales growth guidance goes from 7 to 9% to 10 to 12%. we are also raising our full year adjusted gross margin guidance from approximately 59% to a range of 59 to 59 and a half percent. And we're also raising our adjusted operating profit margin guidance from 13.1 to 13.3% to 13.4 to 13.7%. By segment, we continue to expect adjusted operating margin of approximately 22% for technical apparel, For outdoor performance, we are raising adjusted operating margin guidance from 14.5% to 14.8% to 15.0% to 15.5%. For ball and racket, we continue to expect an adjusted operating margin of 4.7% to 5%. We are assuming full-year net finance costs of approximately $70 million and an effective tax rate of 28%. Other operating income will be approximately $30 million for the full year with approximately $20 million coming in Q2. Net income attributable to non-controlling interest will be approximately $20 million for the full year. We now expect adjusted diluted EPS of $1.18 to $1.23 versus our prior guidance of $1.10 to $1.15, which is based on 586 million fully diluted shares. We are also assuming DNA of 400Million dollars, including approximately 200Million dollars of depreciation. CapEx is still expected to be approximately 400Million dollars. Primarily to support our retail expansion and IT infrastructure investments. Turning to second quarter guidance, we expect reported revenue growth for the grouped in the range of 22 to 24%, which assumes a 200 to 250 basis point benefit from favorable FX impact at current exchange rates. We expect adjusted gross margin to be approximately 59.5% in Q2 of 2026 and an adjusted operating profit margin of 6 to 7%. Other operating income for the quarter will be approximately $20 million. Net finance costs will be approximately $15 million, and our effective tax rate will be approximately 28%. We expect adjusted diluted EPS of 8 to 10 cents per share in Q2. 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 questions.

Thank you. We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, please press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Michael Bonetti from Evercore. Michael, We are just opening our line. It is now open.

A great quarter. And thanks for all the detail today. So just on the guidance, the second quarter revenue guidance signal is really good here. I think 20 to 22% is the biggest forward quarter growth rate he's given us since the IPO. Obviously, we're all staring at a difficult macro right now. So maybe just double click a little bit on What's driving your confidence? I know you said current trends are continuing, but maybe just double clicking on that a little bit. And then I guess on thinking about the product and the road map for Solomon, maybe can you just help us think about the road map for distribution there as you look at the running specialty channel in the US and how we should think about some of the channels willingness to adopt some of the key initiatives like Solomon, the gravel and road products that you guys have coming out, anchoring the brand on the performance side.

Hey, Michael, this is Andrew Page. It's a pleasure. Thanks for the question. You know, obviously, one of the things that you definitely want to keep in mind is that, you know, we believe that given current rates, the second quarter is going to have about a 200, 250 basis point tailwind on revenue. The other thing is that, you know, obviously it's May 18th, May 19th. And so we are meaningfully through the second quarter. We're excited about the trends we see so far. And that's given us confidence to continue to believe in the momentum that we had exiting Q1. Again, remember, we have a differentiated set of products and portfolio. Our products continue to have premium innovation, a lot of technical elegance to them, performance, visible technology, and functionality. And they're highly differentiated. So when you think about even the macro, as consumers continue to prioritize their health, the outdoor environment is accessible. And we have products that provide that with such quality.

it provides them a high return on their investment so and i i take the second question guillaume good morning everybody so um um of course today the current momentum we see is on the sports style segment but we heavily invest in the in the in running and gravel running so it's really one of the key area where we will have a continuous pipeline of product innovation Today, in the US, we are more than a third of the specialty distribution in the market. Once again, our playbook is very cautious, saying, okay, door-by-door, partnership, making sure that they get the full support from people training about Salomon, organizing events, and make sure that we're driving sales through. And the first signal of 26 looks very strong for us. Of course, small scale, but very high level of confidence in this environment.

Thank you for your question. Your next question comes from the line of Matthew Boss from JP Morgan. Matthew, your line is now open.

Thanks, and congrats on a great quarter. So, two-part question. James, first, could you elaborate on the strong momentum which you cited as continued into the second quarter? Have you seen any moderation in any global region tied to this geopolitical backdrop? And if you could touch on real-time trends that you're seeing in China. And then, Stuart, at Arc'teryx, could you break down drivers of the Omnicomp acceleration in the first quarter or any signs of softening at all that you've seen so far in the second quarter relative to that 19% in 1Q?

Hey, Matt, thank you for your questions. Okay, first of all, I will say from the global platform, I mean, We are in the middle of the Q2 and we continue to see strong momentum across global regions, across board for all our three brands. And the momentum still carry on coming from the outstanding Q1 result. So I think the management has a very good level of confidence to deliver whatever guidance we give to you guys in Q2. I think it's... It's a great momentum for the group, okay, so far. And China is still on track. Okay, so I think Q1 will benefit a lot from CNY because, you know, the CNY date is pretty late this quarter, which gives a good opportunity for our business to expand the kind of hot seasons in Q1. In Q2, we continue to see strong momentum, especially past label days, May 1st and a long weekend. We also see a good momentum for our brand. So I think so far, especially in our segment, I still see overall development for our benzene China market.

Great. And Matt, hey, it's Stuart Hazelden. So to respond to your question on the Arcteryx Omnicomps, yeah, the trends that we saw in the first quarter, I would just say sort of very directly, we continue to see those trends extend into the second quarter. We're what we're seeing across all our regions. And that's reflected in the guidance that Andrew shared with you. In terms of the drivers, I would say we saw really healthy traffic-driven comps in the first quarter and now extending into the second quarter. And I would attribute that to just the ongoing brand and just the community engagement that we have across all our regions really paying off. And I think James and Andrew mentioned some of the brand awareness improvements we saw early this year that continue. The conversion trends are also quite healthy and positive. And I think that reflects the strength of the product offerings and the assortments that are are finding as they shop our websites and our stores. And we're also seeing really strong guest acquisition. Our guest file is growing at a healthy pace, strong acquisition and retention, also really healthy and growing average spend per guest. So the guest metrics look quite good. And finally, our stores, as they begin to comp, we're seeing really healthy continued growth in our store productivity as our, as our stores mature and season. So across the board, we're seeing really strong drivers of the, of that comp performance.

Hey Matt, this is Andrew. Great call. Yes. Yeah, Matt, just to wrap up on the first point that you talked about around the macro. I mean, you know, obviously, you know, we don't live in a bubble and we are aware of the risks and some of the decisions that consumers need to make associated with all the geophysical factors out there. To that point, though, we're not seeing any signs yet with our consumer. You saw our results in Q1. Up in all of our regions, we continue to see momentum as we exited Q1 into Q2. And the thing that we really appreciate is that the premium sports and outdoor market, it remains one of the healthiest segments in all of it. So we do benefit from that.

Next question. Great color. Pass the block.

Your next question comes from the line of Laurent Vasilescu from BNP. Your line is now open.

Good morning. Thank you very much for taking my question. I have a question for Guillaume regarding America's wholesale expansion. I think it was called out that JD and Foot Locker are early innings. I'm curious to know, are there any limitations for the brand to go into Dick's Sporting Goods? And I think Guillaume, you mentioned that you're in a third of one specialty stores currently. Is there an opportunity or is there a limitation for you to get to a third of the big box accounts in the US? And then Andrew, a question really on input costs. I appreciate that you called out that you locked in freight for the year, which is great, but you didn't mention that if oil prices do maintain at these levels, you could see an impact potentially on freight or potentially raw materials. If that's the case, Any chance you can quantify that for the audience? Thank you very much.

Let me take the first part first. You know, I did mention the fact that, you know, as oil prices have continued to see pressure, it's important to note that the point that I wanted you to take away from is that it's almost that, you know, Nominal impact, if at all, any on us right now, we believe, and I thought it was important to let you guys know that, you know, we have locked in our freight and logistics costs for the next year. That being said, you know, wrapping it up with if oil prices persist for an elongated period of time, you know, it undoubtedly will have some trickle down. us, but there's nothing to quantify. I wasn't signaling that there's a quantification or a Mendoza line that could trip us. Right now, again, we see the increased costs and it's had nominal impact on us, if at all, Lenny, and that's what we see for the foreseeable future. But again, we are aware of the macro and if there's a seismic shift and it effect, but we're not seeing anything right now. And I wasn't saying, I mean, that's something that's to come at a particular time in the future.

So, if I come back to Salomon wholesale in North America, you know, we have a clear playbook, which is what is the consumer demand. So, we are not looking at business opportunity outside of where we can get traction and having consumer demand. So, when you speak about running specialty distribution, we have a pipeline of innovation. This is super supported by the store, which is also selling performance product and understanding Salomon product. So, with limited aided awareness we can still have quite success in running space when we are coming back to a large partner and big boxes then the challenge is we need to build this awareness in order to drive the sales through and have the consumer demand this is why we didn't want to deviate from our original strategy which is starting from epicenter starting from large city And working together with these big boxes, door by door and opening the door on a very cautious way in order to make sure that we are building success. And from what we learned, we are starting to develop. So being said, clearly we have kind of. we will see an acceleration at GD and Foot Locker so we are strong at REI and Nordstrom today and we are developing fast and for sure the next two biggest target is Foot Locker and GD Sport where for winter we start to think forward and we are looking at you know accelerating the playbook thanks to our brand momentum but once again Demand, consumer demand first, playbook with large city where we are building added awareness before we start thinking about kind of numeric development with a lot of doors in North America.

Great to hear. Thank you very much.

Your next question comes from the line of Jay Sol from UBS. Jay, your line is now open.

Great. Thank you so much. Maybe, Stuart, I'd like to ask you about Arterix, especially the progress in the U.S. You talked about women's. Maybe just give us an idea of where you're at stores-wise, what you see as the opportunity now, and how you see overall sales trending, given some of the new categories you've penetrated and the progress you've made over the last 90 days.

Hey, Jay, it's Stuart. So yeah, thanks for that question. So first on the US, we're seeing really exciting acceleration and conversion that I mentioned earlier. We're definitely seeing those trends in the U.S. And that's been a continuation of what we saw for 2025. So we really saw this begin last year and it's exciting to see it continue. The brand awareness drivers, The brand's still relatively unknown in the U.S., and it's important to see those numbers begin to improve. And we believe that's the unlock as we continue to build into key epicenters like New York, Los Angeles, San Francisco. So the trends there are in pursuit of the potential that we see. During the IPO we had shared, we saw the potential in North America to reach 200 stores. We still see that potential. We're still not even halfway. And as we continue to develop our view of the markets, I would But we're on track. We're seeing great traction and momentum in the U.S. and in North America broadly. For women's, just to turn to that question, we saw really strong continued strength in women's. In the first quarter, our women's business was up over 40%. We saw a 200 basis point increase in penetration of our overall sales to our almost 25% of the total revenue. We believe our women's business can be over 30% of our total revenue by 2030. So we feel like we're ahead of schedule effectively towards that goal. And as James mentioned in his prepared remarks, we're seeing great momentum, both in our core model redesigns, the beta SV in the first quarter was a fantastic very much at the bullseye of who we are as a brand. And the other categories such as pants, and James mentioned the ongoing success we're seeing, the Clarkia, the Nia, the Lucia. This is giving us a lot of energy and excitement around the potential. We really see women's as offering us a vehicle to transform the brand from not just being a men's brand or a men's bias brand, but we see the potential to really transform and become a dual gender, a very balanced brand. So yeah, thanks for the question.

Great, thank you. Your next question comes from the line of Brooke Roach from Goldman Sachs. Brooke, your line is now open. Great.

Good morning and thank you for taking our question. Your guidance today indicates a nice step up in Salomon profitability for the year. However, it looks like you're planning for a little less improvement for the rest of the year despite some easy comparisons. Can you unpack how you're thinking about reinvestments in Salomon as you continue to expand the key epicenter city strategy as well as profit improvement for the brand ahead? On a medium-term basis, what do you think the right profit margin is for the Salomon brand that's achievable as you continue to fuel continued long-term growth. Thank you.

Thanks, Brooke. This is Andrew. Yeah, you know, on the sales, you know, we were very methodical in selecting, you know, where and how we expand the Solomon footwear, especially our sports style offerings. Also, there's some sourcing constraints when you try to, you for the rest of the year. So we believe that the guidance is responsible, it's prudent, and on the margin, we're leaving room for brand building and investments in our global sports campaigns, our gravel campaigns, our local activations. We're making key infrastructure investments in technology and people. We have an exciting pipeline of influencers and event partnerships that you'll hear more about later in the year. And we have more brand store openings believe that with all of those qualitative points I just added on top of 42% growth in Q1, believe that the guidance is prudent and it reflects the investments that we want to make. And also it reflects some of the increased demand against some of the supply constraints that we would have to service that demand. So it's a really good problem to have.

Great. Thanks so much. Your next question comes from the line of Lorraine Hutchinson from Bank of America. Lorraine, your line is now open.

Thank you. Good morning. I'm speaking with Solomon. Can you discuss the momentum of sports style versus performance and how you're working to ensure that that mix doesn't become too skewed toward one versus the other?

Yep. Thanks for the question. It's, of course, you know, when you look at the current success of Salomon Sport Style when this category was not existing like five, six years ago, of course, you know, this is a legitimate question. One thing we have to keep in mind on this model. The first one is why people are choosing Salomon Sport Style is because we are a core authentic brand. We are a good expression of modern mountain sport design. And why we are doing so is because we are leading in winter sports, we are leading in outdoor footwear, we are leading in trail running, in core sports elements. And this is one of the reasons of belief of people moving to sports type. This is one point. The second one is, and you hear about that, is today we are investing a lot in road running and gravel running, which is our key story for road running. And this is about how we can mitigate and having a right balance between the performance development and sport style. Sport style, of course, is developing much faster than performance today. But if you look at this niche today for Salomon, but if you look at gravel and running, which is still small, This is the fastest growing category inside Salomon on small scale, but with a very big traction in terms of consumer demand, still in the core distribution and so on. And this is what it makes us believe that we have today. We will be able to manage our portfolio and our lifecycle development of product in the future.

Thank you for your question. Your next question comes from the line of Paul Lishway from Citi. Your line is now open.

Hey, thanks, guys. I wanted to understand your tariff assumption a little bit better for 2Q and the rest of the year. Just curious how you're treating the inventory that you already brought in. at the 10% rate if you were attaching actually a higher tariff rate to that product, or do you assume it just doesn't flow through in the second quarter? And then second, curious if you can talk about what did change within your second task guidance by region or brand?

Paul, hi, this is Andrew. Thanks for the question. Let me just re-anchor and orient on the tariffs. Our guide does not contemplate any change in tariffs since before the Supreme Court ruling. That being said, Obviously, the tariffs have come down a bit. And to the extent that the tariffs come down, that lower tariff rate runs through our growth sparsity. But the delta is rather minimal. Remember, we have a small exposures. to the U.S. consumer. We believe that that delta between the IAPA rates and the current Section 122 rates on our small U.S. base is relatively small. It's not a big differential from a gross margin perspective, but it does run through our operations. To the extent that we You know, we have applied for refunds and to the extent that we get refunds, you know, we had we got a small amount late last week. It was inconsequential as it relates to our guidance. It would not have impacted what we did about guidance. And that is the only visibility that we have to future tariff refunds. We're not we've not booked a receivable for future tariff refunds. We've not booked, you know, we've not booked an upside consideration. to understand the realizability of those refunds. So I hope that's helpful. And to the extent that we get them, we will deal with any realization as it comes in.

Thank you for your question. Pardon me, please go ahead.

With regard to the 2-H, we're not necessarily going to get into that level of detail. I believe that the second quarter guide, the call-up by operational segment, and the full year guide was very robust and very detailed with regard to what we're seeing. The biggest driver is the visibility that we had into the biggest change in our full year.

We have now reached the end of the Q&A session. I would like to turn the call back to management for closing remarks. Please go ahead.

Thanks, everyone, for joining. I look forward to seeing you in about 90 days on our second quarter call. Have a great rest of the week.

This concludes today's call. Thank you for attending. You may now disconnect.