On Holding, after reporting another quarter of strong results, now sees its FY22 revenues growing by 55 percent to 1.125 billion Swiss francs (€1.16b) and its adjusted Ebitda margin hitting CHF 148 million (€152.1m) despite ongoing margin pressure from the combination of a strong U.S. dollar and weak euro. The Swiss company’s annual adjusted Ebitda margin rate target remains at 13.2 percent.
In the third quarter, On generated a 70 percent increase in operating earnings to CHF 40.7 million (€41.8m) from CHF 23.9 million as Ebit improved by 36 percent to CHF 24.7 million (€25.4m). Net income rose 59 percent to CHF 20.6 million (€21.2m) from CHF 13.0 million for the period ended Sept. 30. Gross margin dipped to 57.1 percent from 60.2 percent due to currency headwinds and lower margins on Direct-to-consumer sales. Total sales were up 50 percent to CHF 328.0 million (337.1m) as wholesale revenues increased 56 percent to CHF 221.4 million (€227.5m) and rose nearly 41 percent in the DTC channel to CHF 106.6 million (€109.6m). Footwear sales increased by 51 percent to CHF 310.9 million (€319.5m); apparel revenues rose by 32 percent to CHF 15.2 million (€15.6m); and accessory sales improved by 25 percent year-over-year to CHF 1.9 million. Period-end inventory was up 82 percent year-over-year to CHF 118.0 million, with much of the product set for Q4 or Q1 delivery.
Regionally, European quarterly sales rose by 31.8 percent to CHF 116.5 million (€119.7m) as the brand experienced strong growth in most key markets, increased its offerings inside JD locations and launched product in select Foot Locker locations and online at footlocker.com. The group debuted an updated website in the U.K. in September and intends to introduce it into other markets in the coming months.
Third-quarter revenues jumped by 57.1 percent in North America to CHF 176.3 million (€181.2m), where the group suffered temporary constraints on its business in mid-August due to issues in its warehouse that prevented it from fulfilling all demand, especially in the DTC channel. With that warehouse issue rectified, the group announced plans to open a new, automated distribution in Atlanta to replace its existing facility there by 2025.
Elsewhere, Q3 sales rose by 85.0 percent in Asia-Pacific to CHF 24.2 million (€24.8m), helped by a strong rebound in China, where it opened four additional stores in September, and continued brand momentum in Australia and Japan; Rest of the World sales jumped by 150.0 percent to CHF 11.0 million (€11.3m) in the period.
Following the recent door openings in China and the Los Angeles area, On intends to open stores in London and Miami in early 2023. And price increases, already implemented in the U.S. market, will reach the EU in 2023.
On the product front, On senior executives say the Swiss company is committed to a circular future. The brand’s new Clear Cloud model, in development for five years, is the first athletic shoe with a midsole made from carbon emissions.
