Third-quarter performance exceeds expectations
During the three months ended Sept. 30, On generated revenue of 794.4 million francs, a 25 percent increase from roughly 636 million francs in the prior-year period. Analysts polled by LSEG had been looking for 763 million francs. Reported net income rose to 118.9 million francs, or 0.36 franc per share, compared with 30.5 million francs, or 0.09 franc per share, a year earlier. Excluding one-time items, earnings came in at 0.43 franc per share, handily beating the 0.25-franc consensus.
Gross margin remained strong as the company held the line on promotions. Executives said they plan to follow the same strategy during the crucial holiday period, declining to run Black Friday or other large-scale discounts despite a competitive environment that has many retailers preparing markdowns to clear inventory.
Contrasting fortunes in the sneaker market
On’s results stand out against a backdrop of moderating growth across the athletic-footwear sector. In late September, industry leader Nike warned that revenue in its current quarter could decline by a low-single-digit percentage as it works to streamline operations and reignite product innovation. Deckers Outdoor, parent of running-shoe brand Hoka, trimmed its sales outlook in October, citing softer demand and currency headwinds.
The divergence underscores the advantage On has carved out in the performance-running niche, where it competes with larger rivals but seeks to differentiate itself through technology such as its proprietary CloudTec cushioning and Speedboard midsole designs. According to market data compiled by Statista, global athletic-footwear sales have slowed in 2024 as consumers contend with higher living costs and volatile currency movements. On, however, has continued to expand its share, particularly in North America and Europe.
Premium strategy for the holidays
Co-founder and executive co-chairman Caspar Coppetti said the company intends to sell at full price throughout the holiday season, a tactic more commonly associated with luxury labels than with mainstream sportswear brands. Management argues that holding prices firm supports brand equity and reinforces On’s goal of becoming “the most premium sportswear brand on the market.”
Imagem: Internet
The approach relies on a pipeline of new products that allow the company to justify higher price points. Last year On introduced the Cloudboom Strike LS, assembled with its LightSpray technique that uses a spray gun to create an upper in minutes. Marathon runner Hellen Obiri wore the model when she lowered the women’s record in the New York City Marathon by nearly three minutes earlier this month, an achievement executives cite as proof of the shoe’s performance credentials.
Innovation remains central to growth plan
Although On is still significantly smaller than long-established competitors, management believes continued investment in technology and design will keep the company on its current trajectory. In addition to footwear, the brand is expanding its apparel line, aiming to bring the same combination of technical features and minimalist aesthetics to running shorts, jackets and lifestyle pieces.
To support its ambitions, On has been broadening distribution through select wholesale partners while accelerating its direct-to-consumer business online and in company-owned stores. Executives said wholesale accounts are accepting smaller order quantities than a year ago, but sell-through rates remain high, enabling retailers to replenish inventory at full margin.
Looking ahead, the company expects currency fluctuations and input-cost volatility to persist, but management said the updated guidance already factors in those risks. The next major catalyst will be holiday sell-through, followed by the traditional new-product cycle around major spring running events.
Crédito da imagem: Denis Balibouse | Reuters
