On Running shoes at On’s headquarters in in Zurich, Switzerland.
CNBC
On sales rose 32% in the Swiss sportswear company’s second quarter, leading it to raise its full-year revenue guidance even as it contends with new tariffs on imports from Vietnam.
The buzzy sneaker brand, which has been credited with taking market share from Nike, now expects full year-sales of 2.91 billion Swiss francs ($3.58 billion), up from its previous outlook of 2.86 billion francs ($3.52 billion). That’s in line with Wall Street expectations of 2.92 billion francs ($3.59 billion), according to LSEG.
On also raised its gross margin guidance to a range of 60.5% to 61%, compared with its previous outlook of between 60% and 60.5%.
The company, which sources about 90% of its goods from Vietnam, raised prices on July 1 to offset the higher costs. It hasn’t seen demand slow down among wholesale partners or consumers, CEO Martin Hoffmann told CNBC in an interview.
“We have a lot of confidence in our lifestyle business, so we skewed the price increases more towards the lifestyle business, while trying to stay a bit more where we were on our running products,” Hoffmann explained. “So far, we don’t see negative impact from the price increases.”
The company, which has grown more than 30% in nearly every quarter since 2023, beat Wall Street’s sales expectations for the second quarter.
Here’s how On did in its second quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:
- Loss per share: 9 cents in francs ($0.11) adjusted. The figure wasn’t immediately comparable to estimates.
- Revenue: 749 million francs ($922 million) vs. 705 million francs ($868 million) expected
On’s net loss in the three months ended June 30 was 40.9 million francs ($50.4 million) or 12 cents ($0.15) per share, compared to a net income of $30.8 million ($37.9 million), or 10 cents ($0.12) per share, in the year-ago period. The loss was primarily driven by foreign exchange fluctuations between the U.S. dollar and the Swiss franc.
Sales rose to 749 million francs ($922 million), up 32% from 568 million francs ($699 million) a year earlier.
On, founded in Switzerland in 2010, has sought to become the most premium sportswear brand on the market. It is one of several companies that have been taking share from Nike, most notably in its running segment. The company draws a fraction of Nike’s annual sales, but it has garnered a reputation for innovation, a recent knock against the legacy sneaker giant.
In a sneaker category that’s been relatively soft in recent years, On has consistently grown sales in the mid-double digits and still has more room to grow given how low its brand awareness is in some parts of the world.
One key to the strategy has been balancing direct sales through its own website and stores and sales through wholesale. At a time when Nike pulled away from wholesalers, On and others filled that crucial shelf space while growing their store footprint and digital revenue.
During the second quarter, On’s wholesale and direct-to-consumer revenue both exceeded Wall Street expectations. On’s wholesale revenue was 441 million francs ($543 million), compared to estimates of 429 million francs ($528 million), according to StreetAccount. Direct sales were 308 million francs ($379 million), compared to expectations of 279 million francs ($344 million), according to StreetAccount.
Sales in the Americas; Europe, the Middle East and Africa; and the Asia-Pacific region all beat expectations, according to StreetAccount.
While On doesn’t break out its performance in China, Hoffmann said it’s been a bright spot for the company, as sales grew about 50% in the second quarter compared to the year-ago period.
“The American and the Chinese consumer is very strong for On,” said Hoffmann. “We have seen basically 50% same-store growth in our retail stores, even bigger growth in our [e-commerce] channel, and then the new stores come on top so … China is a very strong market for us.”
