On Holding raises FY23 outlook; UK, Germany drive EMEA in Q1

On Holding hiked its FY23 revenue forecast by 2.4 percent to at least 1.74 billion (€1.79b) today as it reported 78 percent Q1 revenue growth to CHF 420.2 million (€418.6m) and a 166 percent year-over-year Ebit increase to CHF 51.5 million (€52.9m) for the three months ended March 31. Other aspects of the revised FY23 outlook, fueled by a strong H2 order book, include expectations of a 58.5 percent gross margin, an adjusted Ebitda margin of 15.0 percent and an absolute gross profit of more than CHF 1 billion (€1.03b). 

Senior executives “extremely happy”

Senior executives at the Swiss company told analysts that they remain “extremely happy” with how the brand is “resonating around the world” as it continues to further increase its appeal with younger consumers, gain further traction with its apparel, and become more of a head-to-toe label rooted in running. 

In Q1, gross margin improved by an impressive 650 basis points to 58.5 percent from 51.8 percent, helped by a more normalized supply chain and the discontinuation of air freight expenses.

Reported net income was CHF 44.4 million (€45.6m) against CHF 14.3 million. Wholesale revenues rose by 86.0 percent to CHF 283.2 million (€290.7m) as direct-to-consumer sales lifted 64.3 percent higher to CHF 137.0 million (€140.6m) with EU DTC sales higher than the wholesale. 

On sales rise by 56% in Germany

Regionally, Q1 revenues in the EMEA increased by 51.6 percent to CHF 118.9 million (€122.0m). Sales in Germany, the brand’s biggest market in the geography, rose by 56 percent. Sales more than doubled in the U.K., the geography’s second largest market. 

In APAC, where Australia, China, and Japan each posted year-over-year sales growth of 75 to 100 percent, Q1 revenues grew by 89.4 percent to CHF 31.1 million (€31.9m). There will be 21 On stores open in China by the end of the year. 

Americas’ Q1 revenues increased by 91.9 percent year-over-year to CHF 270.2 million (€277.3m) on strong demand in both the wholesale and DTC channels. New stores are opening in Williamsburg, VA, and Miami later this year. Both locations will have more than double the brand’s current retail space in New York City. 

By product category, footwear sales, bolstered by sellthroughs of the Cloud Surfer and introduction of the Cloud Play and Cloud Sky in select retailers for children, increased by 80 percent to CHF 405.5 million (€416.2m). Apparel sales, strongest in the DTC and new market channels, rose by 48.9 percent to CHF 16.9 million (€17.3m).