On November 12, Swiss sportswear company On Holding AG (NYSE: ONON) released its financial results for the third quarter ending September 30, 2024. Boosted by a significant acceleration in its direct-to-consumer (DTC) channel, On’s net sales for the quarter rose 32.3% year-on-year to CHF 635.8 million (up 33.2% at constant currency), marking a record high. The company also achieved its highest quarterly gross profit margin since its IPO in September 2021, with the Q3 2024 gross margin reaching 60.6%, up from 59.9% in the same period last year. The growth was attributed to the expansion of the DTC channel and ongoing full-price sales management.
During the reporting period, On’s net profit fell by 48.0% year-on-year to CHF 30.5 million, compared to CHF 58.7 million in the prior year, with the net profit margin dropping from 12.2% to 4.8%. However, strong net sales performance and effective cost management drove adjusted EBITDA up 47.7% year-on-year to CHF 120.1 million, with the EBITDA margin increasing from 16.9% to 18.9%.
Propelled by growing global brand recognition, On’s net sales for the first nine months of 2024 grew 27.3% year-on-year, with the Americas region contributing over CHF 1 billion in net sales during this period.
As of the market close on November 12, On’s stock price slightly declined by 0.17% to USD 52.62 per share, with a market capitalization of USD 17 billion. Over the past 12 months, On’s stock has risen 98.12%.
On’s global brand recognition has significantly increased in recent months, fueled by its strong presence at the Paris Olympics, the exceptional success of its athletes, extensive media coverage of its innovative LightSpray™ technology, and long-term partnerships with influential figures such as actress Zendaya. This momentum has been further bolstered by exceptional growth in the APAC region, strategic store openings in key global cities, and the continued success of On’s core running collection. These achievements highlight On’s long-term vision of becoming the world’s premier sportswear brand.
On’s co-founder and executive co-chairman, Caspar Coppetti, remarked, “Just over a year ago, we shared our Dream On vision with the world. This quarter’s record results are a testament to the incredible momentum we have built. From increasing our brand awareness amongst our core communities worldwide, to pushing the boundaries of performance credibility and deepening our sustainability impact, to expanding our premium footprint across all channels, we are turning our dream into a reality. With our continued relentless focus on performance, innovation and authentic partnerships, we are excited to inspire the world to move with even greater purpose.”
On’s co-CEO and CFO, Martin Hoffmann, added, “This quarter’s exceptional results are a demonstration of the incredible work of our team, the growing global demand for the On brand, and the power of On’s premium position. Our commitment to innovation and excellence has allowed us to capture this demand and deliver outstanding performance, particularly in our DTC channel. The resulting net sales and profitability ahead of our expectations puts us in a position to significantly increase our outlook for the full year 2024, and fuels our confidence as we head into the holiday season and continue to shape the future of sportswear.”
Entering the holiday season, On has expanded its own retail footprint to meet the growing demand for its footwear and apparel. The company opened flagship stores in New York, Melbourne, and Milan, sustaining robust DTC sales momentum.
By Region
Net sales in Europe, the Middle East, and Africa (EMEA), the Americas, and the Asia-Pacific (APAC) regions grew 15.1%, 34.1%, and 79.3% year-on-year, respectively, to CHF 165.8 million, CHF 395.5 million, and CHF 74.6 million. At constant currency, growth rates were 15.2%, 34.5%, and 85.7%, respectively.
By Product Category
Net sales of footwear, apparel, and accessories increased by 32.1%, 33.4%, and 53.9% year-on-year, respectively, to CHF 603.7 million, CHF 26.8 million, and CHF 5.3 million. At constant currency, growth rates were 32.9%, 34.7%, and 56.2%, respectively.
By Channel
- DTC sales rose 49.8% year-on-year to CHF 246.7 million (up 50.7% at constant currency), accounting for 38.8% of Q3 sales, a 450-basis-point increase compared to the same period last year.
- Wholesale sales increased 23.2% to CHF 389.1 million (up 24.0% at constant currency).
Looking ahead, On expressed confidence in meeting strong consumer demand in Q4, driven by continued operational excellence and a strong holiday season.
Benefiting from Q3’s outperformance, robust year-to-date results, and ongoing brand momentum, On raised its full-year 2024 net sales growth forecast (at constant currency) to at least 32%, targeting net sales of no less than CHF 2.29 billion. This outlook anticipates accelerated Q4 net sales growth but also acknowledges significant forex headwinds in Swiss franc conversions.
On also expects full-year profitability to exceed prior targets, forecasting a 2024 gross margin of approximately 60.5% and adjusted EBITDA margin at the upper end of its initial 16.0%-16.5% range.
Truist Securities analyst Joseph Civello commented, “We believe these higher forecasts still appear conservative and remain optimistic about future growth opportunities.”
| Source: On official website and financial report, Reuters
| Image Credit: On official website
| Editor: Wang Jiaqi
