On Holding Shares Volatile: Company Misses Q3 Earnings, Raises Annual Outlook

On Holding AG (ONON), the Swiss-based athletic footwear and apparel company, reported mixed results for the fiscal third quarter, leading to share price volatility. The company's shares initially dropped around 7% in premarket trading on Tuesday before recovering to trade around 2% in the green. The market's reaction reflected investors' focus on both the earnings miss and the company's raised annual outlook.
On Holding posted earnings per share (EPS) of CHF 0.09 in the third quarter, falling short of the analyst estimate of CHF 0.15. Revenue, however, came in at CHF 635.8 million, beating the consensus projection of CHF 618.7 million. The company's strong revenue growth and improved gross margin (60.6%) were driven by robust direct-to-consumer (DTC) sales growth of 50% year-over-year and wholesale net sales growth of 23% year-over-year. Adjusted EBITDA reached CHF 120.1 million, marking a 48% year-over-year increase and beating the CHF 108.4 million estimate.
Despite the earnings miss, On Holding raised its full-year 2024 net sales growth outlook to at least 32% on a constant currency basis, implying reported net sales of at least CHF 2.29 billion for the year. This revised guidance is slightly below the consensus estimate of CHF 2.31 billion. The company also expects an adjusted EBITDA margin at the upper end of its previous expected range of 16.0 - 16.5%.

On Holding's strong revenue growth and improved gross margin suggest a positive outlook for the remainder of the year. The company's strategic initiatives, such as expanding its DTC channel and focusing on fewer wholesale doors, are expected to drive future growth. Despite the Q3 earnings miss, On Holding's shares recovered due to the company's positive revenue growth and raised guidance.
Investors should monitor On Holding's progress in executing its strategic initiatives and achieving its revised annual guidance. The company's strong revenue growth and improved profitability indicate a solid long-term growth trajectory. As On Holding continues to expand its DTC channel and optimize its wholesale strategy, it is well-positioned to capture market share in the growing athletic footwear and apparel industry.