On Holding AG does not see its momentum with consumers worldwide slowing down, but it will slow hiring and reduce travel for the remainder of 2022, given current macroeconomic conditions. In raising its full-year outlook for the second time since early May, the Swiss company continues to strategize for “durable and controlled” growth for the remainder of 2022. The group is now forecasting annual revenue growth of 52 percent to 1.1 billion Swiss francs (€1.07b) and a corresponding adjusted Ebitda of CHF 145 million (€141.2m) that will result in an adjusted Ebitda margin of 13.2 percent.
On achieved its highest quarterly net sales ever in the second quarter on continued strong demand across all global regions, with June revenues topping CHF 100 million. Ebit rose 165 percent to CHF 58,191 million (€56.7m) from CHF 21,982 million for the period ended June 30. Operating income was 12.7 percent higher at CHF 26,341 million (€25.6m) as gross margin slipped to 55.1 percent from 60.7 percent. Net income was CHF 49,148 million (€47.9m) against CHF 14,210 million.
| On Holding - Income | |||
|---|---|---|---|
| 2022 | 2021 | Change | |
| Quarter ended June 30 (CHF thousand) | |||
| Net sales | 291,662 | 175,062 | 66.6% |
| Cost of sales | 130,824 | 68,714 | 90.4% |
| Gross profit | 160,838 | 106,348 | 51.2% |
| Selling, general, admin. expenses | 134,497 | 82,966 | 62.1% |
| Operating result | 26,341 | 23,382 | 12.7% |
| Financial income | 1,114 | 5 | 22180.0% |
| Financial expenses | 1,536 | 1,025 | 49.9% |
| Foreign exchange result | 32,272 | -380 | – |
| Pre-tax | 58,191 | 21,982 | 164.7% |
| Tax | 9,043 | 7,772 | 16.4% |
| Net | 49,148 | 14,210 | 245.9% |
| Earnings per share (diluted) | 0.15 | 0.05 | 200.0% |
| Half ended June 30 ($ thousand) | |||
| Net sales | 527,343 | 315,454 | 67.2% |
| Cost of sales | 244,431 | 128,275 | 90.6% |
| Gross profit | 282,912 | 187,179 | 51.1% |
| Selling, general, admin. expenses | 253,200 | 174,699 | 44.9% |
| Operating result | 29,712 | 12,480 | 138.1% |
| Financial income | 1,424 | 12 | 11766.7% |
| Financial expenses | 3,035 | 1,543 | 96.7% |
| Foreign exchange result | 49,462 | 2,299 | 2051.5% |
| Pre-tax | 77,563 | 13,248 | 485.5% |
| Tax | 14,071 | 9,490 | 48.3% |
| Net | 63,492 | 3,758 | 1589.5% |
| Earnings per share (diluted) | 0.20 | 0.01 | 1900.0% |
| Source: On Holding | |||
Total revenues rose by 67 percent to CHF 291,662 million (€284.0m) from CHF 175,062 million as the U.S. and Japan more than doubled their quarterly sales and the U.K. and Australia each posted increases of 60 percent. Wholesale revenues increased by 70 percent to CHF 186.0 million (€181.1m) and surpassed the CHF 100 million threshold for the first time in the direct-to-consumer channel by rising 61 percent to CHF 105.6 million (€102.8m).
Second quarter sales in North America were up by nearly 103 percent to CHF 280.6 million (€273.2m); increased by 17.5 percent in Europe to CHF 83.3 million (€81.1m) with particular strength in the U.K. and France; and rose by 52 percent in Asia-Pacific to CHF 17.9 million (€17.4m) with gains in Australia and Japan offsetting Covid impacts on China results. By product category, shoe sales stepped up by 68 percent to CHF 280.6 million (€273.2m); apparel sales gained 31 percent to CHF 9.2 million (€9.0m); and accessories revenues jumped by 52 percent to CHF 1.8 million (€1.75m).
In October, On is launching a new website that promises an “individualized experience” for shoppers. On the own-store front, the group realized solid results from its Zurich and Tokyo flagships and a “significant” sales increase at its New York City flagship during the period. On deck in H2: a new Los Angeles flagship store in September and one opening in Miami in December. A London flagship store has been pushed back to early 2023. The group continues to invest in shop-in-shops for its key wholesale partners, realizing a stronger sales performance and an improved sales split between footwear and apparel. Global wholesale door growth has increased 2.97 percent since the end of 2021 to 8,612 locations at Q2 end, with approximately 2,000 doors also carrying the brand’s apparel. Management confirmed that sales growth largely comes from increased productivity in existing accounts, not door expansion.
The company will spend an additional CHF 5 to 6 million in additional air freight in Q3 to ensure its new Cloud Monster and Cloud Runner styles are delivered on time. But a more normal ocean to air freight ratio will re-emerge in the final quarter. Approximately 80 percent of volume in European markets is set for a price increase in Q1/23. On has already taken a $10 price hike on 40 percent of its U.S. volume with plans for additional increases in H2 and Q1/23. Meanwhile, at the upcoming U.S. Open, the brand will introduce a limited-edition, mid-top model of its Roger (Roger Federer signature style) with additional style updates coming this fall.
