On Holding AG, which filed its initial public offering on the New York Stock Exchange last September, is making moves to establish a firm foothold as a global performance brand and broaden its reach among consumers worldwide through new distribution channels and a product assortment that stretches beyond premium running shoes.
The decade-old Swiss company, which has grown its employee base by 600 over the last two years to a staff of 1,100, reported a 53.7 percent jump in revenues to 191.1 million Swiss francs (€184.0m) in the fourth quarter ended Dec. 31, despite supply chain constraints and Covid-19 restrictions in Europe that hurt the top and bottom lines. While the direct-to-consumer (DTC) channel grew by 76.7 percent to account for 44 percent of the overall turnover, wholesale revenues rose by 39.3 percent.
The company, generally referred to as On Running, also reported flat adjusted Ebitda of CHF 11,198,000 (€10.8m) for the period. The gross margin improved by 6.8 percentage points to 58.5 percent. On ended up with a net loss of CHF 186,970,000 (€180.0m) for the quarter, compared with CHF 2,565,000 in the year-ago period, largely due to etra charges linked to its IPO.
Sales were up by 101 percent in North America to CHF 133.4 million (€128.4 ) and 35 percent across Asia-Pacific to CHF 10.6 million (€9.6m). European sales, which were most impacted by supply chain issues and pandemic-related closures, fell by an unspecified percentage in the fourth quarter but are predicted to return to growth in the first current quarter.
On booked a net loss of CHF 170,228,000 (€165.2m) for the year, compared with CHF 27,524,000 in 2020. The adjusted Ebitda climbed by 94 percent to CHF 96.4 million (€92.9m) from CHF 49.8 million, pushing the adjusted Ebitda margin went up to 13.3 percent from 11.7 percent. Senior management stated that the long-term objective is to raise that percentage further into the high teens. The annual gross profit margin improved by 5.1 percentage points to 59.4 percent.
Total revenuew grew vt 70.4 percent for the year to CHF 724?6 million. By channel, DTC increased by 71.9 percent to CHF 275.8 million (€265.5m), and wholesale rose by 65.5 percent to CHF 448.8 million (€432.0m). By category, footwear sales came in 68 percent higher at CHF 683.3 million (€657.8m); apparel soared by 131 percent to CHF 36.3 million (€34.9m); accessories increased by 57 percent to CHF 5.0 million (€4.8m)/
Sales in Europe advanced by 39 percent in 2021 to CHF 260.4 million (€250.7m), including a 75 percent increase in the U.K. North American sales went up by 97 percent to CHF 409.5 million (€394.2m), and Asia-Pacific gained 86 percent to CHF 42.7 million (€41.1m). Revenue growth in the U.S.-run specialty channel amounted to 92 percent.
While offering expanded ranges of footwear, apparel, and accessories in running, outdoor and lifestyle, On will open new stores this year in Tokyo (next week), London and Zurich (in the summer). It will also be striking strong distribution relationships with key wholesale partners, resulting in 1,000 branded On shop in shops worldwide. The retail partners include Nordstrom (20 more shop-in-shops), Harrod’s, REI and key Foot Locker and JD Sports locations. As previously reported, the relationship with JD is intended to reach a younger consumer. There will also be targeted running assortments in select Dick’s Sporting Goods and Public Lands (two locations) stores in the U.S. On is planning to build upon the current fleet of eight flagship stores in China.
Among six new running shoe models to debut in 2022 are the Cloud Vista for the outdoor market and the Cloud Monster, which promises maximum cushioning to runners who demand it and is scheduled to come out on March 31. Merging performance, design and sustainability, many new apparel launches are on the horizon, including a line of women’s performance bras.
The company also improved its sales forecast for this year, indicating that it expects to grow by at least 37 percent to around CHF 990 million (€960m), with most of the increase taking place in the second half. The adjusted Ebitda margin is epxected to improve to 13.7 percent.
With production capacity said to be back at 100 percent in Vietnam, the supply chain isn’t expected to impact On’s operations during the second half of 2022. Nonetheless, the company has started to relocate about 10 percent of its footwear production to Indonesia, while continuing to incur necessary air freight costs. It is raising prices by $10 a pair on 40 percent of its U.S. volume to help offset rising labor costs in warehouses. There will be no price increases in Europe this year, but possibly in 2023.
