Key Takeaways
- Shares plummeted over 13% in premarket hours following a second-quarter 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 surpassed the CHF 0.29 projection
- Direct-to-consumer operations expanded 34.3% on a constant currency basis, exceeding targets in all markets
- Annual sales outlook set at CHF 3.47ā3.56 billion, aligned with or marginally under analyst projections
Shares of the Swiss athletic footwear and apparel company tumbled more than 13% in early Monday trading after On Holding delivered second-quarter sales figures that came in below analyst projections.
Sales climbed 21.6% on a constant currency basis, reaching CHF 850.3 million. However, this figure trailed the Street consensus forecast of CHF 881.4 million.
On the bottom line, earnings per share registered at CHF 0.31, exceeding the anticipated CHF 0.29. The quarter delivered mixed results for investors.
While the top line underwhelmed, profit metrics remained robust. Gross margin expanded to 65.4%, representing a 3.9 percentage point improvement year-over-year. The company noted this performance was delivered while fully absorbing elevated U.S. tariff costs, without any tariff relief factored in.
Adjusted EBITDA totaled CHF 168.1 million, with the corresponding margin expanding to 19.8% from the prior year’s 18.2%.
Direct Sales and Clothing Segments Lead Performance
The company’s direct-to-consumer operations emerged as a standout performer. DTC revenue surged 34.3% on a constant currency basis and exceeded projections in all geographic markets.
Clothing sales jumped 56.2% on a constant currency basis, maintaining its faster growth trajectory compared to footwear.
The Asia-Pacific region now accounts for more than 20% of worldwide sales, with strong performance in Japan, South Korea and Greater China markets.
The company reported that customers under age 34 now represent over one-third of its total customer base. The Cloudtilt product line is generating significant traction with younger consumers.
Co-CEO and company founder David Allemann emphasized that the quarterly performance demonstrates the brand’s ability to scale 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 Forecast
Looking ahead to the full fiscal year, On projects sales growth in the low-20% range on a constant currency basis.
Using current exchange rates, this forecast translates to annual sales between CHF 3.47 billion and CHF 3.56 billion. The upper boundary aligns with the CHF 3.56 billion analyst consensus.
Management anticipates the direct-to-consumer channel will continue to outpace wholesale distribution in the latter half of the year.
The company projects full-year gross margin of at least 65.0% and adjusted EBITDA margin between 19.5% and 20.0%.
The sharp premarket decline exceeding 13% occurred despite the earnings beat and solid margin expansion, suggesting the revenue shortfall was the primary catalyst for the selloff.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
