On Holding Raises Outlook After Another Record Quarter
On Holding isn’t slowing down.
The popular Swiss running shoe brand delivered another round of record results — and its sixth consecutive record quarter of top line growth — in Q2. Net sales soared 52.3 percent compared to the prior year, hitting 444.3 million Swiss francs, or $504 million at current exchange, for the quarter ending June 30. Net income decreased 93.3 percent to 3.3 million Swiss francs, in part due to foreign exchange headwinds. Adjusted diluted earnings per share decreased to 0.04 Swiss francs from 0.14 Swiss francs from the prior year.
Given the results, On raised its outlook for fiscal year 2023 and now expects net sales to reach at least 1.76 billion Swiss francs, or more than $2 billion, which would represent a full year growth rate of 44 percent. This incorporates additional negative foreign exchange headwinds of about 3 percent on On’s U.S. Dollar net sales for the second half of the year.
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“The strength of the On brand and continued exceptional growth is visible across channels, regions and products,” said On Co-CEO and CFO Martin Hoffmann in a statement. “We are thrilled that we are visibly progressing further on our strategy and ambition to win credibility and market share in the performance space.”
Notably, On’s North America business increased 66.8 percent in Q2, making the brand an outlier among several other footwear brands that experienced significant declines in the region this quarter amid inventory excesses and a conservative wholesale environment. Net sales in EMEA, Asia-Pacific and the Americas more broadly increased in the double digits as well.
“We are seeing from our key accounts and wholesale partners a very strong sell through at full price,” said Britt Olsen, On’s GM of Americas and head of global commercial strategy, in an interview with FN. She added that reorder rates are returning to previously forecasted levels in the U.S.
“We are actually quite bullish on what will come in the back half of the year based on what we’re seeing in terms of wholesale performance in the U.S. specifically,” Olsen added. On said its current momentum has already persisted through the start of Q3 as it continues to garner “positive feedback” from retail partners.
By channel, global DTC net sales grew 54.7 percent in Q2 driven by strong demand from the consumer. This outgrew the global wholesale channel’s 51 percent growth.
One reason for these strong U.S. numbers is product, Olsen said. On delivered six new performance shoes in just 24 months, which has helped it grab market share in the running channel. Olsen called out the Cloudmonster, one of On’s top performing franchises that features the company’s CloudTec cushioning in the sole, as well as the Cloudrunner and Cloudsurfer. She also highlighted the Cloudboom Echo 3, a long-distance running shoe that launched more broadly in Q2 and is already “selling through incredibly well.”
“I think that the product is really speaking for itself,” Olsen said. “We’re giving fans something totally different and unique in terms of technology and performance.”
