Swiss footwear brand On reported third-quarter net sales increased 46.5 percent, or by approximately 58 percent on a constant-currency basis, to CHF 480.5 million from CHF 328.0 million in the corresponding period in 2022. Growth in the three-month period was said to be driven by On’s direct-to-consumer (DTC) channel, recording growth of 54.6 percent to CHF 164.7 million when compared to Q3 2022, reflecting “the strength of the On brand and ongoing ambition for DTC to outgrow wholesale.” The Wholesale sales channel increased 42.6 percent to CHF 315.7 million.
- Net sales in Europe, Middle East and Africa increased 19.9 percent to CHF 144.0 million.
- Net sales in the Americas grew 60.5 percent to CHF 294.9 million.
- Net sales in Asia-Pacific jumped 71.5 percent to CHF 41.6 million.
Net sales from Shoes increased 47.0 percent to CHF 456.9 million, while Apparel grew 31.8 percent to CHF 20.1 million, and Accessories surged 84.2 percent to CHF 3.5 million in the quarter.
Revenue for the nine-month year-to-date period through September rose 15.8 percent to CHF 1.35 billion.
“We are thrilled about the ongoing strength and momentum of the On brand as we follow our vision to be the most premium global sportswear brand,” company Co-Founder and Executive Co-Chairman Caspar Coppetti. “Innovation and performance are at the core of On, and we are extremely excited about how these elements have once again come to life in the third quarter. We’ve seen exceptional On athlete performances on the streets, trails, tracks, and tennis courts, alongside a number of innovative and exciting product launches. Hellen Obiri’s win at the New York City Marathon was of course a huge highlight, and makes our team even more excited for the Paris Olympics 2024.”
The company said Q3 represents the On brand’s strongest quarter in history across numerous measures.
“The third quarter has not only been the seventh consecutive record top-line quarter but also our most successful quarter in history across numerous measures,” said company Co-CEO and CFO Martin Hoffmann. “We are extremely grateful for the hard work that our team is putting behind our joint mission. The brand momentum for On’s footwear, apparel and accessories continues to convert into high sales growth across all channels. We are planning to add fewer additional wholesale doors in the future and to focus on our existing wholesale partners and our own DTC channels, E-commerce and owned retail. With the increased outlook for the full year 2023 and our recently announced Dream On vision for 2026, we are heading into the holiday season with a lot of confidence and are very excited for the road ahead.”
On said it reached its highest gross profit margin since its IPO two years ago, increasing to 59.9 percent of sales in the third quarter 2023 from 57.1 percent in the comparable period in 2022. The increase was said to be driven by the continued high full-price sales, the increased DTC share versus the prior-year comparable period, favorable freight and FX rates, as well as the discontinuation of extraordinary airfreight usage.
Net income increased 184.4 percent to CHF 58.7 million, or CHF 0.18 diluted earnings per Class A share in the third quarter, compared to CHF 20.6 million, or CHF 0.06 diluted earnings per Class A share, in Q3 2022. Net income margin increased to 12.2 percent of net sales from 6.3 percent of net sales in the 2022 Q3 period.
Adjusted EBITDA increased 44.3 percent to CHF 81.3 million in Q3 from CHF 56.3 million in Q3 last year, and Adjusted EBITDA margin decreased to 16.9 percent from 17.2 percent.
Adjusted net income increased to CHF 65.5 million, or CHF 0.20 diluted earnings per Class A share, in Q3 from CHF 22.3 million, or CHF 0.07 diluted earnings per Class A share, in the year-ago quarter.
Inventories were CHF 424.5 million at quarter-end, up 7.3 percent from the December 31, 2022.
Based on the strong results in the first nine months of 2023 and the confidence in the ongoing strength and demand for the On brand, the company is raising its previous net sales outlook for the full year 2023 to CHF 1.79 billion. In addition, On now expects to reach a higher gross profit margin of at least 59.0 percent for full year 2023, while maintaining the outlook for a 15.0 percent adjusted EBITDA margin.
Photos courtesy On