At its investor day at On Labs in Zurich, Swiss sportswear brand On announced its financial targets for the next three years (FY 2026) and outlined the strategic building blocks to support its next phase of growth.
Following On’s track record of strong growth and increasing profitability, the company intends to double its expected 2023 net sales by 2026 and increase its adjusted Ebitda margin to 18 percent or more in the same period. On also aims to lay the foundation for a much larger company in the future, with the long-term goal of building the “most premium, global sportswear brand.”
“The strength of our brand and products, our outstanding team and innovation capabilities, as well as the very large addressable market, give us numerous opportunities to grow,” said Marc Maurer, Co-CEO. “We are staying true to our core, with controlled expansion into adjacencies, to continue on our path towards the vision to be the most premium global sportswear brand.”
Strategic growth pillars
On’s strategic vision includes three strategic growth pillars:
- Elevate: On continues to see significant growth potential in its core areas. The Elevate growth pillar includes the strategic building blocks to further increase market share in running, brand awareness in communities, and performance credibility and sustainability.
- Expand: On is in the early stages of geographic expansion and sees the potential to significantly increase its footprint. The Expand growth pillar includes the strategic building blocks to expand premium multichannel distribution, its own retail presence and its presence in China.
- Establish: On pushes into selected adjacent territories while staying true to its philosophy of building credibility through performance. The Establish growth pillar includes the strategic building blocks to establish its training community and light up the tennis court, as well as establish a complete head-to-toe establishment across all its verticals.
Financial goals
In addition to updating its strategic priorities, On reiterated its previously provided outlook for the full fiscal year ending Dec. 31, 2023, which includes expectations to achieve net sales of 1.76 billion Swiss Francs (€1.83bn), a gross profit margin of at least 58.5 percent and an adjusted Ebitda margin of 15.0 percent.
The mentioned strategic growth pillars form the basis for the further implementation of the philosophy of combining strong growth with attractive and increasing profitability. By 2026, On aims to achieve the following financial targets:
- Doubling net sales between 2023 and 2026 to at least CHF 3.55 billion, reflecting a CAGR of over 26 percent based on the outlook for the full fiscal year ending Dec. 31, 2023
- Exceeding 60 percent gross profit margin by 2026
- Deliver economies of scale, with the ambition to reach 18 percent+ adjusted Ebitda margin by 2026
Beyond its declared ambitions for 2026, which stem from its vision to build the most premium global sportswear brand, the company announced long-term goals to achieve 10 percent+ apparel share, 10 percent+ owned retail share and 10 percent+ China share of its total net sales. Similarly, the company expects to continue to grow profitability beyond 2026. The updated long-term targets are annual net sales growth of 20 to 25 percent and an adjusted Ebitda margin of over 20 percent.
“We have an exciting product pipeline that includes running, training, and tennis footwear and apparel. Additionally, we believe there are huge opportunities to increase brand awareness and expand through our multi-channel approach. We are enthusiastic about our continued growth.” said Martin Hoffmann, Co-CEO and CFO. “The 2026 targets announced today continue to be above the long-term ambitions shared at the time of the IPO, and we view them as an intermediate step in our ambition to build a much bigger company in the future”.
