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Business of Fashion
4 days ago
- Business
- Business of Fashion
Why Hoka Is Slowing and On Keeps Growing
In the race to become the next sneaker giant, Hoka's pace is flagging while On shows no signs of slowing. The two European brands are regularly mentioned in the same breath as the challengers shaking up the running market and putting a scare in behemoths like Nike and Adidas. Hoka was born in the French Alps in 2009, On in the Swiss Alps in 2010. Both are known for their distinctive midsoles — an exaggerated, stacked platform in Hoka's case, and an array of tubular segments in On's — and just as importantly, for their runaway growth over the past several years. But recently, their paths have diverged. Last week, Hoka-owner Deckers Group reported that Hoka's sales increased just 10 percent in the quarter through March 31, with growth in its direct-to-consumer channels of 23 percent. Those numbers would be welcome to many companies, but they signalled a significant deceleration from Hoka's typical growth rates, sending Deckers' stock down more than 19 percent since, as investors wonder whether the brand is losing momentum and seeing performance more typical of a mature brand. On, meanwhile, reported 43 percent year-on-year growth in the same period, beating Wall Street's expectations. Sales in its DTC channels grew 45.3 percent. Hoka and On's growth rate diverged this earnings season. (Lei Takanashi /Business of Fashion) 'Overall, Hoka has had tremendous growth, but there is increasing competition, and the need to constantly update and innovate is required to continue to maintain the growth metrics,' said Dana Telsey, chief executive of Telsey Advisory Group, which downgraded Deckers' stock after its recent results. The question now is whether the slowdown is temporary. Deckers' leadership attributed Hoka's results to slower acquisition of new customers due to macroeconomic uncertainty; high levels of promotion for outgoing product models as the brand introduces new ones; and shoppers opting to move towards wholesale accounts to try on and buy new products, which hit its DTC sales. It expressed confidence that performance will pick up as it moves through these issues. Both Hoka and On, however, are looking for their route forward as they strive to maintain their growth, and they could see different levels of success in their strategies. For Hoka, a brand that built its customer base around performance-running, it's working to reach a new lifestyle consumer, evident through actions such as its first luxury collaboration with Marni this year. For On, which has long-established wholesale relationships with fashion and lifestyle retailers around its CloudTec sneakers, as well as an ongoing collaboration with Loewe, the brand is shifting gears to emphasise more innovative performance-focussed products, like its Cloudboom Strike sneakers made with LightSpray technology that podiumed the Kenyan distance runner Hellen Obiri at this year's Boston Marathon. The Hoka-Marni Bondi 3LS was released on April 4 in four colorways. (Hoka) Victor Diaz, founder of the fashion-forward specialty running retailer Renegade Running, believes both brands have achieved recent wins with their respective strategies. Diaz currently finds that the best middle and long-distance elite runners today are running for On rather than Adidas or Nike. And when it comes to high-heat lifestyle sneaker releases, he believes Hoka has quickly come up to speed with collaborations and can rival larger brands such as New Balance. But On's current streak of innovation around supershoes could leave Hoka in the dust. 'Hoka hasn't crossed that threshold yet. They're still struggling to find their racing shoe or their fast shoe,' said Diaz. Strengths and Weaknesses Diaz said that Hoka and On are both strong brands that customers continue gravitating towards for different reasons. When it comes to who's currently winning in regards to selling high-priced innovation, he finds that his 25 to 35-year-old customer base is paying up for On's premium supershoes, such as its $330 Cloudboom Strike LS sneakers or its $220 Cloudmonster Hyper. Hoka has lagged behind on innovation in his view, and while it continues to resonate with trail runners, it's still catching up to On in the lifestyle market. However, he feels both brands are losing grip of a middle-market they once dominated and allowing larger players to grab a hold, pointing to shoes such as Adidas' Adizero EVO SL and Asics' Novablast. 'There are shoes [by Asics, Nike and Adidas] that just feel more lively than anything that Hoka and On are doing in that middle-range, $140 to $160 price point,' said Diaz. Hoka is hoping to reassert its grip with recent updates to franchises like the Bondi 9 and Clifton 10, but its rollouts for these products haven't gone as smoothly as planned. The brand has only had limited colour assortments upon release, while discounted pairs of older styles have remained widely available through wholesale channels, eating away Hoka's DTC sales. On, meanwhile, has been able to mitigate any competitive challenges with a more diversified offering that includes products for tennis, hiking and training. These categories also open up more avenues for future growth. 'New categories build a broader positioning for the brand as it grows into a perceived white space in the premium segment of the market,' wrote William Blair consumer research analyst Dylan Carden in a recent research note. 'Power of the brand in turn opens new categories, where the company will follow a similar playbook, building performance credibility from which it can offer broader lifestyle products.' Setting a New Pace But analysts who are still bullish on Deckers believe Hoka's slower growth this quarter wasn't about cooling demand. UBS analyst Jay Sole, for instance, said in a recent note that he anticipates Hoka's growth will improve with more colours arriving for its best-selling franchises, old products being cleared out and other new product launches coming down the pipeline. 'I'm not really seeing the demand erosion,' said Sam Poser, a Williams Trading equity analyst. 'My guess is in their next quarter, we're going to see some kind of a flip where the domestic DTC business in the US inflects positively and is better than wholesale.' Hoka is also gaining ground outside of the US as it builds awareness globally. Deckers shared on its recent earnings call that Hoka's international sales now represent 34 percent of its total revenue, with chief financial officer Steven Fasching adding that 'internationally [Hoka] would outpace what we're seeing in the US.' Deckers' chief executive Stefano Caroti shared that Hoka was 'moving up brand rankings' with specialty partners in the UK, Germany and Italy, and that it was 'increasing its partner footprint in key cities' in China. The brand is approaching international growth in a meticulous and cautious way by focussing on sell-ins rather than sell-throughs, according to Poser. And even with brands like Nike and Adidas putting out new running styles that are clicking with shoppers, Hoka remains a well-known — and trusted — name in the running world. 'Very serious runners, because of the risk of injuries, like to stick to products they already know,' said Cole Townsend, founder of the running-fashion newsletter and online directory Running Supply. For that reason, many runners will still gravitate towards Hoka for daily trainers. On, meanwhile, still has work to do to win over legions of more serious runners, though Townsend does believe the brand is making inroads with professional runners. Granted that lifestyle is a segment On has a stronger footing in, analyst Telsey believes that Hoka's authenticity and connection to customers such as Townsend will move them to try new offerings from Hoka, in running and beyond. 'They're going through a period of transition a bit given the new product that's being introduced,' said Telsey.
The National
29-04-2025
- Science
- The National
How lightness became the ultimate status symbol
Earlier this year, researchers at the University of Toronto, aided by artificial intelligence, developed the lightest and strongest nano-material yet – a carbon nano-lattice so featherweight it can rest on a soap bubble without bursting it – yet strong enough to support more than a million times its own mass. As in science, so in luxury. The past year has seen a flurry of 'world's lightest' high-end launches: Lenovo's sub-1kg AI laptop; Scott's 5.9kg road bike; Helly Hansen's Odin Everdown jacket; and On's Cloudboom Strike running shoes, with uppers literally sprayed to measure using thermoplastics. To underscore the point, in 2024 Samsonite sent its lightest suitcase to date – the two-kilogram Proxis – into low gravity space. In the preceding years, we've seen the arrival of the world's lightest road car (the McLaren Elva) and the world's lightest chair – Oskar Zieta's 1.7kg Ultraleggera. But why the collective sprint towards weightlessness, when for so long luxury was – consciously or not – associated with heft? If the value of a timepiece was once measured in part by the bicep it helped build, why are watches by Richard Mille, or new carbon and glass fibre composite designs from IWC, Hermès, Tudor and Tag Heuer, now celebrated for their barely-there weight? A scene from Jurassic Park captures the logic perfectly. When a boy discovers a pair of night-vision goggles under a car seat, a lawyer asks, 'Are they heavy?' The boy replies yes. 'Then they're expensive,' the lawyer says. 'Put them back.' Indeed, classic psychological studies show just how deeply we associate weight with value. One found that if you reduce a container's weight by 15%, consumers notice no difference; reduce it by 30%, and they're unwilling to pay full price. Our perceived value of an object often correlates with its expected weight – and when that expectation is disrupted, our internal pricing system collapses. Yet according to Nick Tidball, co-founder of Vollebak – a brand known for its use of high-tech, ultralight materials such as graphene and aerogel – the appetite for lightness is the natural result of a more mobile, fast-moving society. 'It's helped us realise that lightness is a good thing,' he says. 'It doesn't mean a lack of durability, for example. It can be applied to other nice things in our lives, like clothing. A coat doesn't have to be thick and heavy to be warm or waterproof. Luxury generally is becoming lighter – look at architecture, or even cooking. Michelin-starred food used to mean big chunks of meat in rich sauces. Now there's a lightness of touch.' It's a shift echoed in materials preferences, too. While Aston Martin still offers wood fascias for its cars, more than 90 per cent of customers now choose carbon fibre instead – partly for aesthetics, partly because it signals modernity, says chief creative officer Marek Reichman. 'Customers are increasingly getting the message about these once-rare materials,' he says. 'They see them in aviation, in Formula One, and now maybe in their skis, their pen or watch. They're part of their everyday changing world. It's performance as luxury.' Still, old habits persist. Though manufacturers are gradually replacing iron ore–based materials with lighter, stronger alternatives – magnesium, titanium, polymers and ceramic composites – many consumers remain attached to traditional notions of luxury. Case in point – most Aston Martin buyers still opt for leather upholstery over lighter weight Alcantara. 'They decide they can live with the few extra kilograms for the perceived luxury and sensory appeal of leather,' says Reichman. So does the shift towards lightness signal the end of the traditionally heavyweight? Does the sturdy, bench-made brogue have a future in a world where, as shoemakers Giuseppe Santoni demonstrated last year, proper dress shoes can weigh only 295 grams? Tidball doesn't think the two are mutually exclusive. He recently purchased a Ligne Roset modular sofa, he says, precisely because it was lightweight and mobile – 'even if it cost as much as a Chesterfield'. But he believes there's space for both – 'a super lightweight trainer next to those brogues, to be worn depending on the occasion'. Benoit Mintiens, the product designer behind train carriages, pushchairs and the Ressence watch brand, speaks from experience when he concedes that, after generations of heavyweight materials the likes of marble and oak being conflated with ideas of lasting quality that association is not an easy one for many consumers to shake. It's why super-yacht designers have had to find ways to create millimetre thick sheets of marble for their clients' preferred interior designs. He recently launched Ressence's Type 7, a super light model with a full titanium dial and bracelet, and has already grown used to 'people coming up to me and asking if there's anything in it,' he laughs. 'It's a deeply human question. But if the watch was heavy, like a Rolex, that's a question that wouldn't occur to them'. Still, he argues, lightness must prevail – because the real driver isn't aesthetics, but sustainability. Using less material, he notes, means more efficient production and less energy required to transport goods. 'We're all getting more sensitive to ecological pressures,' Mintiens says. 'And weight, by definition, means more material – and more material means more resources. Logically, we'd make any product lighter, providing it doesn't hamper its function. Why do we still make heavier things? Not because they're more luxurious or higher quality, but because it's easier. Weight is a cheap way to suggest quality. It means not having to think of design solutions that give the same strength with less material. The reassurance of weight, the idea that there's some sense of honesty in it – that's an old way of thinking. And it's one we need to lose.'
