On, backed by Roger Federer, is gaining ground against competitors Nike and Adidas with a 28% increase in sales
As the Swiss sneaker manufacturer attempts to take on well-established competitors like Adidas AG and Nike Inc., On Holding AG witnessed a rush of customers purchasing its running shoes and new lines of training apparel.
The business, sponsored by Roger Federer, reported on Tuesday that second-quarter sales increased 28% year over year to 567.7 million Swiss francs ($654.5 million) at constant exchange rates, somewhat exceeding analyst projections.
“We view the 2Q24 result as better than we expected and pointing to strong demand for the brand,” Cristina Fernandez, an analyst at Telsey Advisory Group, wrote in a note.
Early New York trading saw a 7.5% increase in On’s shares, taking the gain this year to around 50% and surpassing competitors including Nike, Adidas, and Puma SE.
Relatively new to the sports industry, On was founded in 2010, and its quarterly results frequently create fluctuations in the share price. The company’s recent quick growth throughout North America and Europe can be attributed to the enthusiastic support of speciality running retailers and wholesale partners.
These days, it’s seeking to transition from being an early adopter to a well-established business that can continue stealing clients from competitors by selling a greater number of its items directly to consumers.
The Zurich-based company affirmed its full-year forecast of sales growing by at least 30% and achieving a gross profit margin of around 60%. To get there, it will need to ratchet up the pace of its sales and profit growth in the second half of the year.
The gross profit margin reached 59.9% in the second quarter, a touch behind analyst estimates.
Sportswear Line
The company plans to gain momentum in the coming months by adding more automation to its US warehouses, it said. That’s part of its broader efforts to scale up its distribution capabilities in North America, its biggest market.
On continued its expansion in the Americas, where sales jumped by about 25%, it said Tuesday. Revenue grew by about 22% in the Europe, Middle East and Africa region and by 74% in Asia-Pacific, its smallest region.
The company is increasingly marketing high-end sportswear including hiking T-shirts that sell for $80 and trek jackets that fetch $290. While still small, that business expanded by 63% in the quarter.
On continues to generate most of its business with footwear, thanks in part to new products like the $150 Cloudrunner 2 and the $160 Cloudtilt, which it’s marketing with singer and actress Zendaya, a new brand ambassador.
The company is hoping that Zendaya and FKA Twigs, another ambassador, will help build credibility with younger customers. It also wants to capitalize on the Paris Olympics, where six of its sponsored athletes took home medals, including bronzes for tennis star Iga Świątek and the Boston and New York City marathon champion Hellen Obiri.
“We have seen a significant increase in brand awareness,” co-Chief Executive Officer Martin Hoffmann said in an interview, citing record traffic to the company’s website, among other things. “This is really meant to benefit On in the long term and to lay the foundation for reaching our goals.”
