Key Highlights
- Shares of ONON tumbled over 13% in premarket trading following a Q2 sales shortfall
- Quarterly sales reached CHF 850.3 million, falling short of the CHF 881.4 million analyst forecast
- Earnings per share of CHF 0.31 exceeded the CHF 0.29 consensus projection
- Direct-to-consumer sales surged 34.3% in constant currency terms, leading growth across all geographic markets
- Company projects annual net sales between CHF 3.47 billion and CHF 3.56 billion, meeting or slightly trailing Wall Street forecasts
Shares of On Holding experienced a sharp decline exceeding 13% during Monday’s U.S. premarket session following the Swiss athletic footwear and apparel company’s second-quarter financial report that showed sales figures below analyst projections.
Quarterly sales climbed 21.6% in constant currency terms to CHF 850.3 million. However, this figure came in below the analyst consensus forecast of CHF 881.4 million.
On the profitability front, earnings per share registered CHF 0.31, surpassing the CHF 0.29 consensus estimate. The results presented a mixed picture for investors.
While the revenue figure disappointed, the company’s profitability metrics remained robust. The gross profit margin expanded to 65.4%, marking a 3.9 percentage point improvement compared to the prior-year period. Management noted this achievement came despite fully absorbing elevated U.S. import duties, with no tariff relief factored into the results.
Adjusted EBITDA totaled CHF 168.1 million, while the adjusted EBITDA margin improved to 19.8% from 18.2% in the year-ago quarter.
Direct Sales and Clothing Lines Lead Performance
The company’s direct-to-consumer business segment emerged as a standout performer. DTC sales expanded 34.3% on a constant currency basis and exceeded projections in all geographic regions.
The apparel category delivered particularly strong results, with net sales soaring 56.2% in constant currency terms, maintaining its faster growth trajectory compared to the footwear segment.
The Asia-Pacific region now accounts for more than 20% of worldwide net sales, with particularly strong performance in Japan, South Korea, and Greater China markets.
Management highlighted that consumers aged 34 and younger now represent over one-third of the company’s total customer base. The Cloudtilt product line has been instrumental in attracting this younger demographic.
Co-CEO and company founder David Allemann emphasized that the second-quarter performance demonstrates the brand’s ability to expand while maintaining its premium market position.
“This financial strength allows us to reinvest in what drives our long-term success: authentic brand connections, premium customer experiences, and, above all, continuous performance innovation,” Allemann said.
Annual Guidance
Looking ahead to the full fiscal year, On anticipates net sales growth in the low-20% range when measured in constant currency terms.
Using current exchange rates, this projection corresponds to net sales between CHF 3.47 billion and CHF 3.56 billion. The upper bound of this guidance range aligns with the CHF 3.56 billion Wall Street consensus.
Management anticipates the direct-to-consumer channel will continue to outpace wholesale distribution in the latter half of the fiscal year.
The company projects a full-year gross profit margin of no less than 65.0% and an adjusted EBITDA margin spanning 19.5% to 20.0%.
The premarket stock decline of over 13% occurred despite the positive earnings surprise and impressive margin expansion, with the revenue shortfall appearing to drive investor sentiment and the subsequent selloff.
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