Swiss Sneaker Brand On Raises Outlook as Sales Soar in Asia
(Bloomberg) — On Holding AG boosted its sales and earnings forecasts for the year after a better-than-expected third quarter in which consumers in Europe and Asia snapped up the Swiss sneaker maker’s high-priced footwear.
The Roger Federer-backed company now sees revenue growing 34% this financial year on a constant currency basis, above analyst estimates and three percentage points higher than its previous target. That new goal translates to net sales of 2.98 billion Swiss francs ($3.7 billion) at current spot rates, it said Wednesday.
Zurich-based On has become one of the top performers in the sneaker world, expanding from its core running shoes to other areas like tennis, training and apparel. The brand has grown rapidly since its 2010 founding, eating into market share of bigger players including Nike Inc. and Puma SE.
The company expects its gross profit margin to reach 62.5%, up from the previous range of 60.5% to 61%, despite US trade tariffs weighing on the sneaker industry. On cited better-than-expected growth from both its expanding network of company-owned stores, and its wholesale business.
The optimistic outlook runs counter to the wider investor caution on the sports apparel sector, driven by fears of inflationary pressure as President Donald Trump’s policies increase trade friction and raise anxieties over growth.
Shares of On jumped as much as 11% in premarket trading in New York. They were down 36% this year through Tuesday’s close, underperforming some rivals as a tariff dispute between the US and Switzerland also weighed on the stock.
Strong Demand
On has the most expensive running shoes in the industry on average and began edging prices higher in the US in July. Those price increases have been “fully digested” and had no effect on demand for the products, Chief Executive Officer Martin Hoffmann said in an interview.
On is poised to surpass its mid-term sales and profit goals for the second year in a row. Hoffmann said he’s increasingly confident On will exceed those three-year targets laid out in October 2023, and sees room for expansion after that.
“This company is not set up for managing what we have — it’s set up for growth,” he said.
Third-quarter sales rose more than analysts expected to 794 million Swiss francs, up 35% from a year ago in constant currency terms. Revenue jumped 33% in Europe, the Middle East and Africa and 109% in the Asia-Pacific region, above estimates. Growth of about 21% in the Americas was just shy of expectations.
While the US remains On’s single biggest market, the company is being more targeted about how exactly it generates growth there, Hoffmann said. On is still only present in about 40% of popular shopping destinations including Dick’s Sporting Goods Inc. and Foot Locker, he said.
“We are fully focused on building our brand in a premium way and this means being very selective with whom we’re working with,” he said.
–With assistance from Subrat Patnaik.
(Updates with premarket trading in sixth paragraph.)
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