Amer Sports, Inc. (AS) Q1 2026 Earnings Report, Transcript and Summary

Hello, everyone. Thank you for joining us, and welcome to Amer Sports First Quarter 2026 Earnings Call. [Operator Instructions] 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 Amer Sports earnings call for the first quarter of fiscal year 2026. Earlier this morning, we announced our financial results for the quarter ended March 31, 2026, 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, 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 remarks from our CEO, James Zheng; and CFO, Andrew Page, followed by a Q&A session until 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 we'll also walk through our updated guidance. Arc'teryx CEO Stuart Haselden and Salomon CEO, Guillaume Meyzenq, 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 take share globally. All segments, geographies and channels performed extremely well in the quarter, led by exceptional Salomon Softgoods growth, a strong Arc'teryx Omni-comp and solid -- and we delivered strong results across the P&L, including 32% sales growth and 160 basis points of adjusted operation margin expansion. All 4 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 Amer Sports Group. Several factors give me that confidence. First, we own and operate a unique portfolio of premium innovation-driven sports and outdoor brand. These brands are still only small to medium size with significant room to grow globally. Second, Arc'teryx 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 sneak offering is inflecting globally but the brand still only has a small share of the very large global market. Fourth, our worsened and the winter sports equipment franchises -- have leading market positions, which we believe will deliver slower long-term growth except for weather 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 offering. Before I turn it over to Andrew, I will briefly recap key highlights from our 3 segments. Starting with technical apparel. Arc'teryx delivered another great quarter with broad-based strength across regions, channels and categories, including another exceptional performance from women's strong momentum in the direct-to-consumer channel continued driven by 19% Omni-comp. We continue to envision Arc'teryx as a truly global brand with significant runway in all major markets, and we are encouraged that the brand is generating strong double growth across all 4 regions, including a notable acceleration in North America, with this momentum continued in Q1, growing faster than any other category for Arc'teryx. Our confidence in the women's opportunity is rising as we are both on attracting new female consumers to the brand and to driving higher engagement and spend with existing female consumers really see brand affinity with women rising as we improve fit style and function while building expanded assortments, leveraging our unique design advantage. Our decision to redesign core ABCD models for her while also expanding family -- is working well. We also believe that success is bottoms with franchise sector, Clarkia, Leutia and Nia pants is also helping us unlock the female consumers. On the men's side, we are excited to welcome a new Arc'teryx designer -- joined us most recently from Mountain Hardware and the North pace prior to that. His leadership will be instrumental as we continue to push the boundaries of our men's offering when it comes to corn problems for the Mountain assets with technical performance and a beautiful design. Footwear had another great quarter with strong growth across regions, led by both existing styles and a new launch. Popular existing starts include Norvan LD 4 trail shoes, which has strong consumer affinity and is our biggest volume drivers, followed by the Gore-Tex hiking shoe. And we launched the 2 in Q1, which is a technical call relationship. Looking forward, we are confident Arc'teryx has an exciting pipeline of full 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 Veilance 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. Circularity and ReBIRD continue to be at the heart of Arc'teryx. In Q4, we increased the credit guests receive when they trade and use Arc'teryx products, and this continue to drive strong triple-digit growth in trade in activities in North America albeit of small bags. Our on-mountain -- remains a critical role in community management and the memo Mountain Academy we hosted in February was again a great success with 22,000 attendees over the weekend and the 42 clinics caused by Arc'teryx assets. Academies are becoming a key platform for ReBIRD, generating consumer awareness, interest and the rebar service. Big performance, our other technical apparel brand delivered solid growth in Q1. After the brand returned in 2025 the turnaround remains on track so far in 2026 with sales increase across key channels and regions. The brand also continued to improve profitability driven by our concentrated efforts to reduce promotional 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 Softgoods, the investment we are making to grow Salomon brand awareness and the distribution footprint are paying up. at Salomon Footwear momentum is expanding across regions channels and in both portal and the performance. We are also excited to share that we are seeing a clear acceleration in North America as we leverage 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 continue taking share despite challenging market conditions. As you know, Salomon footwear has become a very important growth engine, not just for Salomon, but for Amer Sports Group. We are excited to see a demand inflection for Salomon unique outdoor sneak offering, especially since the brand still only has a small share of the global sneak 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 diligent in the life way. Number one, global sports time momentum continues. We believe Salomon is connecting with younger consumers and the female consumers in our way traditional outdoor brands haven't. Sports style is critical to developing Salomon's position as the modern outdoor sneak brand. including franchises such as XT6 and XC Whisper. Second, our performance and the running lines are also working well. We continue to believe our new GRVL franchise is happy to unlock the run category for salmon like never before. Salomon is gaining traction in the run specialty channel in South America and recent running launches included SLAB Phantom 3, which is ultra lightweight raising shoe engineered for elite performance as well as the -- Third, is Salomon amazing brand in -- Great China, Asia, where we believe we operate the most productive and profitable sneak shops in this industry. With China was Salomon fastest growing region in Q1, driven by both postal and performance as well as strong growth in apparel. Salomon is also experiencing surging demand in Korea and Japan both large sneak 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 1 global epicenter cities include Paris, London, Shanghai, Beijing, Tokyo, New York. We have seen both rising brand aware and accelerating revenue in our epicenter cities. Fifth is the strong pool demand we are seeing from consumers in Europe, Salomon's home market, driving strong preorders and sell-through. Sportstar continued to be the growth driver, but we have also seen a real inflection in global in Europe supported by marketing campaigns, in-store events and the running event activations. Also, we are seeing high e-comm demand growth in Europe even as we expand our retail and wholesale footprint, 6 in North America, which is the largest sneak market in the world, but it's still a small business for us in the U.S. we are seeing a clear growth inflection driven by sports star and the performance. Not only are we expanding our shelf space and sell through existing wholesale products but we are also now starting to move Salomon footwear into key wholesale partner in the U.S. As you know, there is a strong demand for Salomon sneakers in the U.S. We're still very limited distribution for consumers to find our products. Moving to board and the rakes highlights. On records close 13% in Q1, driven by continued strength in Softgoods, and the -- sports. Our -- products continue to resonate very well with consumers from performance racquets to tennis, and footwear and the worse Softgoods continued its exceptional trajectory with very strong growth an increasing number of the worst top -- wearing head to toe kits at key events, including Martha -- winning the Madrid Open and the men's top 10 player -- In Q1, we launched a version 10 of our iconic great racquet -- has been well received in the market across all channels with reorders from key customers coming in already. We are also seeing strong validation of the BB10 onto with world #1 Aryna Sabalenka who won India West and Miami Open, paying with a racquet our version of the new brake 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 are experiencing exceptional trends across each of our 3 biggest growth engines, Arc'teryx, Salomon Softgoods and Wilson Tennis 360, which are all still relatively small franchises with significant room to expand. Turning to our Q1 results. Amer Sports 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. All in racquet also had impressive double-digit sales growth. By channel, the group continues to be driven by DTC, which grew 45% led by Salomon and Arc'teryx. 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%, EMEA accelerated to 27% and the Americas grew 18% in Q1. As it relates to our EMEA 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 remained 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 that 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 Racquet due to ongoing investments in Wilson Tennis 360 and higher corporate expenses. Led by strong 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. D&A was $103 million, which includes $50 million of ROU depreciation. Adjusted net finance cost 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 prior in the year. Adjusted diluted earnings per share was $0.38 compared to adjusted diluted earnings per share to $0.27 last year. Now turning to segment results. Technical apparel revenues increased 33% to $885 million, led by Arc'teryx. Growth was fueled by 41% D2C expansion, including a 19% Omni-comp. Technical apparel wholesale revenue revenues grew 16%. Regionally, the technical apparel growth rate was led by Asia Pacific and a course continue to be central to Arc'teryx growth aspirations, and we plan to open 30 to 35 net new Arc'teryx stores in 2026 across all markets. Our store opening plan in corporate is a similar level of gross new stores as in 2025 and partially offset by the continued closure of certain outlets and other suboptimal locations. We are planning 10 to 12 net new store owns in Greater China in 2026 with openings weighted towards H2 and Q4. After multiple years of optimizing the fleet, we are excited to resume new store extension 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 third flow location to the ground level with much higher traffic and more premium locations amongst the luxury brands. In Q1, Arc'teryx growth accelerated in North America, and we delivered strong double-digit Omni-comp 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 U.S. 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 city store, where we are encouraged by the building sales trajectory over the course of this past winter. Also, our Mountain 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 weather. Technical adjusted operating margin expanded 250 basis points to 26.4%, driven by both gross margin expansion due to positive region and get 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 Salomon 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% omni-comp 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 and 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 solid and 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 9 net new Salomon 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 2016, 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 and the highest traffic shopping set 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 again in China. A great example of this is the new Salomon flagship we've recently opened in Beijing's highest footfall shopping center, Chaoyang Hopson One 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 that 5 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. 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 RAI, 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 person 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 Salomon 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 U.K. 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-piece 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 Salomon'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 Salomon Sneakers and also Wilson Tennis 360 in a way they could not as stand-alone entities. Moving to Ball & Racquet, where revenues increased 13% to $347 million, driven by Softgoods and racquet sports. We continue to see very strong momentum in Tennis 360 globally. By category, the growth was led by Softgoods, up very strong double digits with continued momentum in all regions. Strong racquets 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 & Racquet growth rate was led by Greater China, APAC and EMEA. We opened 1 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 Softgoods growth. We are seeing strong growth -- and inflatables in baseball last year. We also continued 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 & Racquet segment adjusted operating profit and 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... 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 that 32% sales growth. We are very comfortable with the level and quality of our inventory, this high inventory growth is primarily related to the same factors we've previously disclosed. Number one, earlier receipt of seasonal Arc'teryx merchants to prepare for the better in-stock positions. Two, higher Arc'teryx goods and 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 Arc'teryx 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 IEEPA tariff rates that were in place before the February Supreme Court really 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 -- to corporate. Included in our press release and the earnings deck, as 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 Arc'teryx franchise, accelerating Salomon's Softgoods 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 & Racquet sales growth guidance goes from 7% to 9%, and to 10% to 12%. We are also raising our full year adjusted gross margin guidance from approximately 59% to a range of 59% to 59.5%, and we're also -- adjusted operating margin of approximately 22% for technical apparel. For outdoor performance, we are raising adjusted operating margins guidance from $14.5 million -- we are assuming full year net finance cost 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 noncontrolling 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 D&A of $400 million, including approximately $200 million of ROU depreciation. CapEx is still expected to be approximately $400 million primarily to support our retail expansion and IT infrastructure investments. Turning to second quarter guidance. We expect reported revenue growth for the group 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 would 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 $0.08 to $0.10 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.

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

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 you've given us since the IPO. Obviously, we're all staring 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 Salomon maybe you could just help us think about the road map for distribution there as you look at the running specialty channel in the U.S. and how we should think about some of the channels willingness to adopt. Some of the key initiatives like Salomon, the GRVL and road products that you guys have coming out anchoring the brand on the performance side.

Michael, this is Andrew Page. It's a pleasure. Thanks for the question. Obviously, one of the things that you definitely want to keep in mind is that we believe that given current rates, the second quarter is going to have about 200, 250 basis point tailwind on revenue. The other thing is that obviously, it's May 18, May 19, 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 are highly differentiated. So when you think about even the macro, as consumers continue to prioritize...

We have a continuous pipeline of product making sure that they get the full support from people trending about Salomon organizing events and make sure that we are driving sales through and the -- third signal of '26 looks very strong for us, of course, small scale, but a very high level of confidence in this environment.

Your next question comes from the line of Matthew Boss from JPMorgan. Matthew, your line is now open.

Congrats on a great quarter. So a 2-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 Omni-comp 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?

Matt, thank you for your questions. Okay. First of all, I would say -- from this global platform, I mean, -- we are in the middle of the Q2, and we continue to see strong momentum across global regions across of all our 3 brands and the momentum still carry on coming from the outstanding Q1 results. 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 a great momentum for the group, okay, so far. And China is still on track, okay? So I think Q1, we benefited a lot from CNY and because the CNY date is pretty late this quarter, which gives a good opportunity for our business to expand the kind of hot season in Q1. In Q2, we continue to see strong momentum, especially past Labor Day on May 1 and a long weekend. We also see a good momentum for our brands. So I think it's -- so far, we -- especially in our segment, I see still a bit bullish on the overall development of our business in China market.

And Matt, it's Stuart Haselden, to respond to your question on the Arc'teryx Omni-comps. Yes, 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 really excited for 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 a 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 awareness efforts, top of funnel 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 improvement 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, the assortments that our guests 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 stores mature and season. So across the board, we're seeing really strong drivers of that comp performance.

Matt, this is Andrew. Great color. Yes. Matt, just to wrap up on the first point that you talked about around the macro. I mean, obviously, we don't live in a bubble, and we are aware of the risks and the -- some of the decisions that consumers need to make associated with all the geopolitical factors out there. To that point, though, we're not seeing any signs yet with our consumer. We continue to -- you saw our results up 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 and all of it. So we do benefit from that.

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

I have a question for Guillaume regarding the Americas wholesale expansion. I think it was called out that JD and Foot Locker are early innings. But 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 1/3 of run specialty stores currently. Is there an opportunity? Or is there a limitation for you to get to 1/3 of the big box accounts in the U.S? 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 did 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?

Let me take the first part first. I did mention the fact that with as oil prices have continued to see pressure, it's important to note that the point that I want you to take away from is that it's almost a nominal impact, if at all, any on us right now. we believe, and I thought it was important to let you guys know that we have locked in our freight and logistics costs for the next year. That being said, wrapping it up with if oil prices persist for an elongated period of time, it undoubtedly will have some trickle down effect on the consumer and could possibly have impact on 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 cost, and it's had nominal impact on us, if at all any, 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 in oil and cost over time, this could have some longer-term effect, but we're not seeing anything right now, and I wasn't seeing that something is to come at a particular time of the future.

So if I come back to salmon wholesale in North America, we have a clear playbook, which is where the consumer demand. So we are not looking at business opportunity outside of where we can get traction and having consumer agreement. So when you speak about running specialty distribution, we have a pipeline of innovation. This is supported by the store, which is also selling performance project and understanding the 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 sell-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 largely -- and working together with these big boxes, door by door and opening the door in 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 JD and Footlocker. So we are strong at RAI and Nordstrom today, we are developing fast. And for sure, the next 2 biggest target is Footlocker and JD Sports where full winter will start to think forward and we are looking at accelerating the playbook, thanks to our brand momentum. But once again, demand -- consumer demand first, playbook with large city where we are building awareness before we start thinking about kind of numeric developments with a lot of doors in North America.

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

Great. Maybe, Stuart, I'd like to ask you about Arc'teryx, 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 trend given some of the new categories you penetrated and the progress you've made over the last 90 days.

Jay, it's Stuart. So yes, thanks for that question. So first, on the U.S., we're seeing really exciting acceleration in the comp business and the underlying traffic and conversion that I mentioned earlier, definitely. We're definitely seeing -- unlock during the IPO, we had shared -- we saw the potential in North America, we've got 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 expect that potential could even expand. 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 our overall sales to almost 25% to 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 selling product, and that's very much at the bull's eye 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 Leutia. 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, we see the potential to really transform and become a dual-gender very balanced brand. So yes, thanks for the question.

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

Great. 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. Yes, on the sales, we were very methodical in selecting where and how we expand the Salomon footwear, especially our sports valve offerings. Also, there are some sourcing constraints when you tried it, we grew 42% in the first quarter. And so they're obviously sourcing constraints you can't plan a business throwing a debt kind of rate for the rest of the year. So we believe that the guys are responsible, it's prudent. And on the margin, we're leaving room for brand building and investments in our global sports. Our campaigns, our GRVL 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 globally and especially in Asia. And so we believe that with all of those qualitative points, I'd just add on top of 42% growth in Q1. We 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.

Your next question comes from the line of Lorraine Hutchinson from Bank of America.

Speaking with Salomon, 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 towards one versus the other?

Yes, thanks for the question. It's, of course, when you look at ground success of Salomon is for time when this category was not existing like 5, 6 years ago. Of course, this is a legitimate question. One thing is -- one thing we have to keep in mind on this model. The first one is why people are choosing Salomon for -- and this is one of the reason 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 all running -- and this is about how we can mitigate and having the right balance between the performance development and sports style. Sports style, of course, is developing much faster than performance today. But if you look at this niche -- Salomon. But if you look at gravel and -- 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 life cycle development of projects in the future.

Your next question comes from the line of Paul Lejuez from Citi.

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 half guidance by region or brand?

Yes. Paul, it's Andrew. Thanks for the question. Just -- 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 gross parts, all right? And -- but the delta is rather minimal. Remember, we have a small exposure to the U.S. consumer. We believe that, that delta between the IEEPA rates and the current Section 122 rates on our small U.S. space is relatively it's relatively small. It's not a big differential from a gross margin perspective, but it does run through operations. To the extent that we have applied for refunds and to the extent that we get refunds, we got a small amount late last week. It was inconsequential as it relates to our guide, it would not have impacted we did about guidance. And that is the only visibility that we have to future tariff refunds. We're not -- not booked a receivable for future tariff amounts. We've not booked, we've not booked an upside or contingent gain because we just don't have enough visibility 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.

Pardon me, please go ahead.

With regard to the 2H -- with regard to the 2H guide, we're not necessarily going to get into that level of detail. I believe that the second quarter guide, qualified 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 first quarter and the visibility that we've had exiting the first quarter after right now. That's the 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.