Swiss performance sportswear brand On had its strongest quarter in history, with third-quarter net sales increasing by 50.4 percent, reaching 855.4 million Swiss francs ($907.5 million) in net sales year to date.
In a Nutshell: “The momentum of the On brand shows no signs of slowing. This quarter has seen On reach more new fans than ever before with a combination of innovative performance footwear and apparel, powerful marketing campaigns and immersive shopping experiences,” David Allemann, co-founder and executive co-chairman of On, said. “Our unrelenting focus on performance innovation continues to be a winning formula, inspiring us to create the world’s first-ever shoe made from carbon emissions and helping our fans and elite athletes to achieve their dreams.”
On said it is monitoring the macroeconomic developments and potential changes in consumer demand with caution. However, based on the outstanding performance of the first three quarters of 2022 and strong order books for quarter four, On is raising its previous guidance by 25 million Swiss francs ($26.45 million) and now expects net sales of 1.125 billion Swiss francs ($1.19 billion) and an increased adjusted EBITDA of 148 million Swiss francs ($156.58 million) for the full year 2022. Guidance for the full-year adjusted EBITDA margin remains unchanged at 13.2 percent.
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On is continuing to create innovative products to unleash the full potential of the world’s best athletes. In addition, On is continuing its sustainability efforts and leading the footwear industry by presenting the first-ever shoe made out of carbon emissions.
Net Sales: Driven by strong wholesale growth, up 55.6 percent to 221.4 million Swiss francs ($234.49 million), and direct-to-consumer growth, up 40.7 percent to 106.6 million Swiss francs ($112.9 million), as well as an increase of 85.2 percent growth in the Asia-Pacific region and continued strong demand in North America (up 57.1 percent), On had a third-quarter net sales of 328 million Swiss francs ($347.9 million). Despite an uncertain macroeconomic environment, foreign exchange headwinds, and temporary supply chain constraints, net income and adjusted earnings before interest, tax, depreciation and amortization (EBITDA) reached 20.6 million Swiss francs ($21.82 million) and 56.3 million Swiss francs ($59.62 million), respectively.
Net Earnings: On delivers a third quarter 2022 gross profit margin of 57.1 percent, down from 60.2 percent in the prior year period and up from 55.1 percent in the second quarter 2022, reflecting unfavorable foreign exchange rates and continued, yet reduced, transitory headwinds from a higher airfreight share. Gross profit increased 42.7 percent to 187.4 million Swiss francs ($198.49 million). Net income increased to 20.6 million Swiss francs ($21.82 million) from 13 million Swiss francs ($13.77 million), with a net margin income increase to 6.3 percent from 6 percent.
CEO’S Take: Martin Hoffmann, co-CEO and CFO of On, said: “We are extremely proud to have exceeded 1 billion Swiss Francs in net sales when considering the past 12 months leading up to September 30. Our recently launched running and trail running shoes are extremely hot and win market share globally. The win of On Athlete Gustav Iden in the men’s Ironman World Championships in Hawaii, the launch of our first online re-sell platform Onward and our WeChat mini program in China, and the latest owned retail store opening in Los Angeles are just some of the highlights in the last three months. The strong nine-month results and the strong order books for [quarter four] and beyond give us a lot of confidence going into the last months of the year and into 2023, putting us in a position to again increase our net sales outlook for the full year 2022. All of this would not be possible without our culture and the team that is standing behind it.”