On Holding had another stellar quarter as the Swiss brand continued to defend its prime spot in the ultra-competitive running market.
In the second quarter, the running shoe company reported record net sales of 567.7 million Swiss francs, up 27.8 percent from the same period a year ago. (Sales increased 29.4 percent on a constant currency basis.)
Q2 gross profit margin was 59.9 percent, which was up from 59.5 percent in the year-ago period. Net income came in at 30.8 million Swiss francs, and adjusted diluted earnings per share increased to 0.14 Swiss francs from 0.04 Swiss francs a year ago. Adjusted EBITDA was 90.8 million Swiss francs.
Over the last 12 months, On has achieved net sales of over 2 billion Swiss francs.
“We clearly see that the brand is extremely hot all around the world,” Martin Hoffmann, co-chief executive officer and chief financial officer, told FN in an interview. “And in the end, that high demand is converting into all our channels: wholesale, e-commerce and retail.”
By channel, wholesale sales grew 29 percent in Q2 and DTC sales increased 30 percent, driven by in-store sales as well as digital. As On continues to expand its retail fleet, new stores in cities like Paris and Hong Kong have seen positive early trends in terms of customer conversion. On the digital side, On’s recently launched mobile app exceeded expectations in terms of downloads and sign-ups.
“It’s just the beginning of creating a new level of customer experience in the digital world,” Hoffmann said of the app, which has seen stronger engagement in the apparel segment compared to the brand’s website.
Looking at the quarterly results by region, sales in Asia-Pacific grew 73.7 percent to 59.2 million Swiss francs, and sales in EMEA increased 21.8 percent to 138.4 million Swiss francs.
In the Americas, the company’s largest market, net sales increased 24.8 percent to 370 million Swiss francs. The U.S., specifically, had a negative sales impact from brand’s warehouse transition in the region that caused some order disruptions.
Apparel sales increased 63 percent in the quarter, showing strong momentum for the growing category. Footwear sales were up 26.7 percent and accessories sales were up 23.6 percent.
On the product side, Hoffmann called out recent key launches that contributed to high demand, such as the Cloudrunner 2 and the On x Loewe Cloudtilt 2.0 sneakers, which were single out as the hottest footwear products on Lyst’s quarterly ranking. And just last week, On launched its latest cushioned running shoe, the Cloudsurfer Next.
Hoffman also called out more recent initiatives that are bringing On’s brand awareness to the next level, such as store openings in key cities; a new multi-year partnership with Zendaya; a strong performance at the Olympic Games with 66 athletes; and the recent debut of LightSpray, On’s latest upper technology created through a fully automated production process.
Given the strong trends, On reiterated its full-year outlook, and still expects to reach net sales of 2.26 billion Swiss francs in 2024. Gross profit margin is expected to be around 60 percent and adjusted EBITDA margin is projecting in the range of 16 percent to 16.5 percent for the full year. Constant currency growth rate for the year is expected to be at least 30 percent.
“What we have now done in the last months and weeks is clearly a laid a foundation for much more brand awareness in the world,” Hoffmann said. “And so we expect that this will convert into strong demand in the mid and the long term. We also have more exciting product launches for the second half of the year.”
