Swiss sneaker brand On lifts targets as Europe, Asia fuel demand
The Roger Federer -backed company now sees revenue growing at least 31% on a constant currency basis this financial year, above analyst estimates and three percentage points higher than the previous target. It translates to net sales of 2.91 billion Swiss francs ($3.6 billion) at current spot rates, On said Tuesday.
Zurich-based On has become one of the top performers in the sneaker world, expanding from its core running shoes to other areas like tennis, training and apparel. The brand has grown rapidly since its 2010 founding, eating into market share of bigger players including Nike Inc. and Puma SE.
On's shares are up nearly 17% so far this year in New York, outperforming rivals including Adidas AG.
The company expects its gross profit margin to reach a range of 60.5% to 61% for the year, slightly up from its previous target despite US trade tariffs weighing on the sneaker sector. On cited better-than-expected growth at its expanding network of company-owned stores and its e-commerce channels.
'The energy everywhere is so high,' Chief Executive Officer Martin Hoffmann said in an interview. 'We are in a really strong position and the whole ecosystem is supporting our aspirations.'
On expects to open another five to 10 stores later this year, including one in its home of Zurich, another in Palo Alto, California, and a couple of locations in South Korea, Hoffmann said.
Second-quarter sales rose more than analysts expected to 749 million Swiss francs, up 38% from a year ago in constant currency terms. The gross profit margin reached 61.5%, also better than analysts' estimates.
On has the most expensive running shoes in the industry on average and began edging prices higher in the US last month, especially on lifestyle products.
That approach hasn't scared off consumers so far, with strong early demand for On's new highly cushioned Cloudsurfer Max model which came to market in July, according to Hoffmann.
Revenue in the second quarter jumped 43% in Europe, the Middle East and Africa and 101% in the Asia-Pacific region, significantly outperforming estimates. Growth of about 17% in the Americas was just shy of expectations.
On's new store in Singapore generated some of the best opening-weekend business that the company has seen anywhere in the world, Hoffmann said.
'The demand there is so strong,' he said of the Asia-Pacific region. 'Much stronger than what we are willing to supply to the market.'
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