Consumer goods On continues to record strong growth

The running shoe brand On significantly increased its turnover in the third quarter of 2024 and raised its forecast for the year as a whole. Direct sales in particular contribute to improved profitability.

Running shoe company On has achieved impressive sales growth in the third quarter of 2024 and raised its forecasts for the year as a whole. The company, which is listed on the New York Stock Exchange, reported sales of 635.8 million Swiss francs, an increase of 32% compared to the previous year. At constant exchange rates, growth even amounted to 33 percent.

The growth in the Asia-Pacific region is particularly noteworthy, where sales rose by 79% to CHF 74.6 million. In America, On's largest market, sales also increased by 34 percent to CHF 395.5 million. In the Europe, Middle East and Africa (EMEA) region, On recorded sales growth of 15 percent to CHF 165.8 million.

Increasing profitability

In addition to sales growth, On was also able to increase profitability. At 60.6%, the gross margin in the summer quarter reached a new high since the IPO in 2021. In the same quarter of the previous year, the gross margin was 59.9%. On attributes this increase to the increased momentum of direct sales. Sales in the more profitable DTC channel (direct-to-consumer) increased by around 50% in the third quarter. Together with disciplined cost management, this led to an increase in the operating profit margin (adj. EBITDA) to 18.9 percent, compared to 16.9 percent in the previous year.

Despite these positive developments, On recorded a decline in net profit to CHF 58.7 million, which corresponds to a drop of 48% compared to the same quarter of the previous year.

Optimistic outlook

In view of the strong performance in the year to date, On has revised its sales expectations for 2024 as a whole upwards. Adjusted for currency effects, sales are expected to increase by at least 32%, which would correspond to sales of at least CHF 2.29 billion. In 2023, On achieved sales of 1.79 billion Swiss francs.

Due to the strong momentum in the DTC channel, On also expects a higher gross margin of 60.5 percent and an adjusted EBITDA margin at the upper end of the target range of 16.0 to 16.5 percent. The company, in which Roger Federer also holds a stake, is thus continuing its successful course.

SDA