Wilson products at the Paragon Sports store in the Chelsea neighborhood of New York on January 4, 2024.
Jeenah Moon | Bloomberg | Getty Images
Amer Sports, the Finnish sports company behind the Wilson tennis racket and Arc’teryx, made a muted debut on the public markets on Thursday as shares rose 3% after pricing in a discounted initial public offering.
The stock opened at $13.40 per share on the New York Stock Exchange under the ticker ‘AS’ and closed at the same price. Based on the closing stock price and the company’s 484 million shares outstanding, Amer Sports has an approximate market capitalization of approximately $6.49 billion.
Amer had priced its IPO at $13 a share and raised $1.37 billion from the offering. It originally expected to offer 100 million shares at $16 to $18 each.
The offer valued Amer at about $6.3 billion, down from a previous valuation of as much as $8.7 billion.
When Amer debuted, only 2.5 million shares traded, indicating little selling interest and low for a 105 million share offering. Typically, bookrunners would try to open with about 10% of the shares, which would be about 10 million shares.
Amer’s decision to discount its IPO came after Federal Reserve Chairman Jerome Powell said the central bank was not ready to start cutting interest rates, casting a heavy shadow on market sentiment and the faltering IPO market.
Wall Street has been looking forward to seeing a resurgence in the IPO market after it has been largely dormant for the past two years, but recently saw debuts from, among others, the German shoemaker Birkenstockthey have been muted and failed to impress.
While demand has eased across the overall consumer discretionary sector, Amer chief financial officer Andrew Page said its target consumers were resilient and continued to choose its brands.
“Our focus has always been to make the best-in-class products in the world. Our products are full of innovation, our consumers value quality, innovation and modernity,” said Page. “That’s the core of who we are as a company, that’s the core of what we offer to the market.”
He said he is not worried about Amer’s stock performance on any given day and that the company is more focused on executing its long-term strategy.
Amer Sports executives celebrate the company’s initial public offering on the New York Stock Exchange in New York on February 1, 2024.
Brendan McDermid | Reuters
Amer runs some of the most recognizable brands in sports, but its balance sheet is saddled with $2.1 billion in debt and it didn’t make a profit between 2020 and September 2023, according to a securities filing.
In the nine months ended September 30, 2023, the company had revenue of $3.05 billion, up from $2.35 billion in the same period a year ago. It posted a net loss of $113.9 million during the period, higher than the $104.4 million it lost in the previous period.
In an interview with CNBC, CEO James Zheng said Amer plans to use the IPO proceeds to improve its balance sheet and fund growth initiatives at Wilson, Arc’teryx and Salomon. He pointed out that Arc’teryx, known for its expensive winter jackets, has very low unaided brand awareness in North America, particularly the US, so there is a lot of room for growth.
Investors also had concerns about Amer’s ties to China and its reliance on the region, according to a person familiar with the matter.
The company’s operations in China are developing at a time when tensions are rising between the US and Beijing. Many companies are trying to diversify their market share so that they are not as exposed to disruptions in the region.
In 2020, Amer did 8.3% of its business in Greater China, and in 2022, that figure nearly doubled to 14.8%. In the nine months ended September 30, 19.4% of sales came from the region.
In response, Zheng said that “it is very important” for sportswear companies to establish a strong footprint in China, and so far, Amer has seen a “great return” on its investment in the region. He added that while the region is “important” to the company, “it’s just part of the whole.”
“Our biggest market is still North America, which accounts for 40% of the business, and Europe accounts for 32%. China currently only accounts for 20%, so it’s part of the business,” Zheng said. “We are a global company.”
— Additional reporting by CNBC’s Bob Pisani.
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