On Holding, the Swiss-based “disruptor”, which generated $1 billion in trailing 12-month sales through Q3, continues to focus on innovation and sustainability issues while establishing growth levers to reach younger, Chinese, and apparel consumers as a head-to-toe brand rooted in performance with lifestyle adaptability. On continues to eye a 60 percent gross margin rate without the impact of added freight costs and a high-teens Ebitda margin.
Co-CEOs Martin Hoffman and Marc Maurer told ICR Conference attendees that the company faced no operational constraints in Q4, some nine months after facing huge supply chain disruptions in Q1/22. The company, which has been investing “heavily” in warehouse capacity and automation implementation to avoid some of its past challenges, generated 94 percent of its Q4 online sales at full price. The duo also believes the company needs to be strong in apparel if it eventually wants to be a $5 billion brand. There will be more running pieces going forward as the company takes its apparel learnings from the last two years to grow the segment.
On the footwear front, the Cloud Surfer, targeting marathon runners with 4-hour to 4.5-hour finishing times, launches this spring. The Cloud Nova, popular with younger consumers, is already on the market in Foot Locker and JD Sports, and the initial Cloud has been re-launched with 45 percent recycled material. There is also a carbon-plated Cloud model with a $300 retail price tag.
Hoffman and Maurer confirmed the company believes in a combination DTC/wholesale distribution strategy, with DTC enhanced through the opening of own doors. Q1 debuts are set for London, Miami and Williamsburg, Brooklyn, with 3 to 4 more stores opened over 2023, excluding an approximately 10 retail locations that will debut in China.
