Onon Stock Surges 32% on Record Sales and Upgraded Annual Forecast

Shares of Swiss sneaker manufacturer On Holding AG, backed by tennis champion Roger Federer, opened Tuesday with a notable surge as the company posted strong second-quarter results and revised its annual outlook upward. The sportswear company, listed on the NYSE under the ticker ONON, reported record sales figures, buoyed by robust direct-to-consumer (DTC) performance.

The company announced a 32% increase in quarterly revenue year-over-year, reaching 749.2 million Swiss francs. This exceeded market expectations and was notably above analyst forecasts from Visible Alpha. DTC revenue itself climbed 47% to 308.3 million Swiss francs, attributing growth to operational excellence and favorable foreign exchange impacts. This DTC growth set a new record, constituting 41% of the total revenue. Meanwhile, sales from the wholesale channel rose 23% to 441.0 million Swiss francs.

In his statement, co-founder and Executive Co-Chair David Allemann emphasized strategic success from a diversified portfolio of footwear and apparel. This success has prompted the company to adjust its full-year guidance, projecting revenues to reach 2.91 billion Swiss francs, up from the previous forecast of 2.86 billion Swiss francs. The gross profit margin is also expected to increase, projected between 60.5% and 61.0%, surpassing the initial estimate of 60.0% to 60.5%.

Despite significant growth, On Holding faced a substantial net loss due to negative currency effects, resulting in a deficit of 40.9 million Swiss francs for the quarter, contrasting to a profit of 30.8 million Swiss francs in the previous year's quarter. The dynamic expansion of sales, especially in the Asia-Pacific region, reflects a doubling of revenue to 119.2 million Swiss francs. This figure marked an increase of over 101% adjusted for currency changes. The Americas showed 16.8% growth while EMEA revenues, encompassing Europe, the Middle East, and Africa, surged by 42.9%.

In terms of channels, while wholesale remains the largest revenue generator, the company's own retail sector displayed notable momentum with improved efficiency and higher revenue contributions. Adjusted EBITDA rose dramatically by 50% to 136.1 million Swiss francs. This growth led to greater expectations from management, who now forecast a currency-adjusted sales increase of at least 31% for 2025, raising their previous estimate.

Moreover, the sportswear company demonstrated remarkable resilience, as highlighted by the co-founders and executives, portraying optimism for long-term brand development. CEO and CFO Martin Hoffmann expressed confidence in the distinctiveness and attractiveness of On's future brand proposition, underlined by a promising outlook for continued year-on-year growth in sales at constant exchange rates. Analysts anticipate a marked growth trajectory in line with these revised forecasts, showcasing the brand's strength amidst a competitive market landscape.

On's stock, having been down nearly 17% since the start of the year, is now reflecting investor confidence following these revelations, evidenced by the initial surge in share price at the opening bell on Tuesday. This performance, resonating with a robust strategic execution, signals potential opportunities ahead in the global markets for On Holding, underscoring the aspiration to further cement its footprint in the sneaker industry.