Faster growth from apparel and footwear

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From Next magazine issue4/2010. Text by Markku Rimpiläinen

Amer Sports has been preparing its revised strategy since April under the lead of the company’s President and CEO, Heikki Takala. The updated strategy emphasizes faster growth in apparel and footwear, consumer-centric product creation, brand marketing, as well as stronger sales and distribution. Operational excellence is still one of the cornerstones of strategy. The company has also worked on new long-term financial targets, which focus on profitable growth and a strong cash flow.

Amer Sports aims at an organic and currency-neutral annual net sales growth of five percent, as well as an EBIT totaling at least ten percent of net sales.

Profit from winter sports irrespective of the weather

Every business now has clearly defined growth and profitability targets, as well as roles for the creation of scale benefits and synergies. The key objective of Winter Sports Equipment, for example, is to improve profitability and reduce dependence on weather conditions.

“Skis will be made when they are needed. In good winters, production volumes can be increased according to demand,” said Takala in an investor seminar held in Helsinki in September.

Amer Sports will continue to look for synergies so that it can put its scale benefits to increasingly better use in, for example, sourcing and distribution.

At the Group level, synergies are mainly found between Ball Sports, Winter Sports Equipment, and Apparel and Footwear. These are also the focus of business integration and synergistic development.

However, integration will not be advanced forcefully if it does not seem natural.

“If, for example, the distribution channels of products are completely different, it may be difficult to find synergies,” Takala pointed out.

Accelerated growth from apparel and footwear

Amer Sports has defined apparel and footwear as its growth drivers.

“We can continue to accelerate growth, since the size of our business is already sufficient and we have also done very well in the recent past,” said Takala.

In apparel and footwear, the company will adopt a category-based approach to product development across brands. This will enable Amer Sports to achieve significant scale benefits in R&D, product line management, sourcing and manufacturing.

Apparel and footwear are already made by Salomon, Wilson and Mavic. Takala saw no obstacles to cross-country and skiing clothing being included in Atomic’s offering.

Regional strength

In addition to increasing its input into global marketing, Amer Sports will focus on understanding regional customer needs.

“Asian consumers favor different types of products than their European counterparts. We must organize ourselves in a way that makes us strong in every major regional market.”

Sales and distribution will be boosted. The company’s own retail and e-commerce sales will also be further emphasized.

Own stores are of great importance in the emerging markets, where well-developed distribution networks are not always available. According to Takala, Russia and China are the most promising countries from Amer Sports’ perspective.

“However, even if we open ten of our own stores in China, that’s still not much. We must find the best possible distribution channels and partners.”

Making daily operations efficient

Operational excellence, highlighted as the strategic target in winter sports, is particularly important, since Amer Sports makes most of its winter products in its own plants.

The product range and production lines have already been simplified. For example, the number of common components used in different ski models will be further increased in the future. Amer Sports drives operational excellence with the Focus program, which encompasses the entire production and distribution chain.

Strategic cornerstones of Amer Sports

• Clear portfolio roles and business synergies
• Faster growth in softgoods
• Winning with consumers
• Winning in go-to-market
• Operational excellence

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