On Holding AG raised its full-year outlook again after reporting earnings in the third quarter ended September 30 grew  20.5 percent on an adjusted basis on a 50 percent sales gain.

Martin Hoffmann, co-CEO and CFO, of the company, said: “With 50.4 percent top-line growth and CHF 56.3 million adjusted EBITDA, Q3 has been another record quarter for On. We are extremely proud to have exceeded 1 billion Swiss Francs in net sales when considering the past 12 months leading up to September 30th. 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 Championship in Hawaii, the launch of our first online re-sell platform Onward, our we-chat mini program in China, and our 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 Q4 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.”

David Allemann, co-founder and executive co-chairman, said: “The momentum of the On brand shows no signs of slowing. This quarter has seen On reach more new fans than ever before with our mix of innovative performance footwear and apparel, powerful marketing campaigns and immersive shopping experiences. 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.”

Third Quarter 2022 Financial and Operating Metrics
Key highlights for the three-month period ended September 30, 2022 compared to the three-month period ended September 30, 2021 include:

  • net sales increased 50.4 percent to CHF 328.0 million;
  • net sales through DTC sales channel increased 40.7 percent to CHF 106.6 million;
  • net sales through the wholesale sales channel increased 55.6 percent to CHF 221.4 million;
  • net sales in North America, Europe, Asia-Pacific, and Rest of World increased 57.1 percent to CHF 176.3 million, 31.8 percent to CHF 116.5 million, 85.2 percent to CHF 24.2 million and 150.0 percent to 11.0, respectively;
  • net sales from shoes, apparel and accessories increased 51.6 percent to CHF 310.9 million, 32.4 percent to CHF 15.2 million and 25.2 percent to CHF 1.9 million, respectively;
  • gross profit increased 42.7 percent to CHF 187.4 million;
  • gross profit margin decreased to 57.1 percent from 60.2 percent;
  • net income increased to CHF 20.6 million from CHF 13.0 million;
  • net income margin increased to 6.3 percent from 6.0 percent;
  • basic EPS Class A (CHF) increased by CHF 0.02 to CHF 0.07;
  • diluted EPS Class A (CHF) increased by CHF 0.02 to CHF 0.06;
  • adjusted EBITDA increased 48.5 percent to CHF 56.3 million from CHF 37.9 million;
  • adjusted EBITDA margin decreased from 17.4 percent to 17.2 percent;
  • adjusted net income increased to CHF 22.3 million from CHF 18.5 million;
  • adjusted basic EPS Class A (CHF) increased by CHF 0.01 to CHF 0.07; and
  • adjusted diluted EPS Class A (CHF) increased by CHF 0.01 to CHF 0.07.

Key highlights for the nine-month period ended September 30, 2022 compared to the nine-month period ended September 30, 2021 include:

  • net sales increased 60.3 percent to CHF 855.4 million;
  • net sales through the DTC sales channel increased 54.7 percent to CHF 295.6 million;
  • net sales through the wholesale sales channel increased 63.5 percent to CHF 559.7 million;
  • net sales in North America, Europe, Asia-Pacific, and Rest of World increased 79.8 percent to CHF 496.4 million, 27.0 percent to CHF 274.7 million, 82.3 percent to CHF 58.6 million and 186.6 percent to CHF 25.7, respectively;
  • net sales from shoes, apparel and accessories increased 61.7 percent to CHF 814.0 million, 35.8 percent to CHF 35.8 million and 55.1 percent to CHF 5.5 million;
  • gross profit increased 47.7 percent to CHF 470.3 million;
  • gross profit margin decreased to 55.0 percent from 59.7 percent;
  • net income increased to CHF 84.1 million from CHF 16.8 million;
  • net income margin increased to 9.8 percent from 3.1 percent;
  • basic EPS Class A (CHF) increased by CHF 0.21 to CHF 0.27;
  • diluted EPS Class A (CHF) increased by CHF 0.20 to CHF 0.26;
  • adjusted EBITDA increased 21.4 percent to CHF 103.5 million from CHF 85.2 million;
  • adjusted EBITDA margin decreased from 16.0 percent to 12.1 percent;
  • adjusted net income increased 87.2 percent to CHF 84.1 million from CHF 44.9 million;
  • adjusted basic EPS Class A (CHF) increased 66.0 percent to CHF 0.27 from CHF 0.16; and
  • adjusted diluted EPS Class A (CHF) increased 67.2 percent to CHF 0.26 from CHF 0.16.

Key highlights as of September 30, 2022 include cash and cash equivalents decreased 25 percent to CHF 493.0 million compared to December 31, 2021; and net working capital was CHF 382.6 million as of September 30, 2022 which reflects an increase of 104.0 percent compared to December 31, 2021.

Outlook
On had a successful first nine months of 2022, achieving three consecutive net sales records in the respective quarters driven by increased brand awareness and successful product launches. Based on all indications available, including the company’s order book for the remainder of 2022 and 2023, the company expects to continue to drive growth despite the current macroeconomic environment.

Following transitory supply shortages as a result of factory closures in 2021, impacting the first half of 2022, On said it goes into the fourth quarter with a strong inventory position and expects the use of air freight to be at a fully normalized level in the final months of 2022. While On expects continued margin pressure from the combination of a strong USD and weak EUR compared to its reporting currency CHF, the current demand puts On in a favorable position to increase absolute and relative profitability.

For the year ending December 31, 2022, On has again increased its net sales outlook by CHF 25 million, to CHF 1.125 billion, representing a year-over-year growth of approximately 55 percent compared to 2021. Despite the pressures on margins described above, On is raising its adjusted EBITDA target for the full year to CHF 148 million and reiterating the target adjusted EBITDA margin of 13.2 percent.

Photo courtesy On