On Wednesday, On blew open the doors in its initial public offering (IPO) debut, with shares vaulting 46 percent on the day. The Swiss-running brand priced well above its projected IPO range and raised $746.4 million in the offering.
The filing comes following a period of explosive growth for the company, with the funding expected to take growth to the next level as it introduces itself to more runners and extends its offerings into other performance and lifestyle categories.
According to its prospectus, sales in the first six months rose 84.5 percent to CHF 315.4 million ($345mm) from CHF 170.9 mm a year ago. Net income came to CHF 3.8 million against a loss of CHF 33.1 million a year ago.
The company was founded in 2010 in Zürich, Switzerland by Olivier Bernhard, David Allemann and Caspar Coppetti. As part of a unique five-partner leadership model, Bernhard is an Executive Board member, while Allemann and Coppetti share the title of Executive Co-Chairmen. The three co-founders focus their time on innovation and product development. The remaining two partners, Marc Maurer and Martin Hoffmann, share the title of Co-CEOs with a focus more on operational and administrative responsibilities.
Here, Maurer discusses with SGB Executive the benefits expected from the IPO, the brand’s commitment to run and its growth prospects.
Why did On go public? Was it an exit strategy for some investors? This is just the next step. It’s an important milestone, but this is just the next step in On’s journey of bringing our brand, our experience, our products – footwear and apparel – to more consumers worldwide. And it’s a beautiful window that we can use to make On more transparent and more known. We are committed to staying in the company for a long time. We all have voting shares. We’re making sure that the way the industry got to know On is also how On will continue to be in the future.
How does the IPO help the business? The IPO is helping us to bring the brand, bring our footwear and bring our apparel to more consumers worldwide, especially in the U.S., which is our largest market with almost 50 percent of our revenues. We’re using this opportunity to move along our mission, igniting the human spirit through movement and getting more people moving. The funding will help us drive innovation and our sustainability goals. Last year we launched Cyclon, our first fully-recycled product that comes in a subscription model. We will also use part of the funding to continue to fuel our expansion. On is present in over 60 countries. These funds will allow us to accelerate the growth and the opening of our own stores, especially in countries like China.
Can you talk about On’s leadership structure? On is a partnership, and it’s been a partnership for many years. It’s beautiful because we are mainly serving each other, and it’s not just the partnership between the five of us. It’s also a partnership between the wider team. Our senior leadership team is 14 people strong and 50 percent women. What it allows us to do is that rather than one person making the decisions, it’s more balanced. It also allows us to divide and conquer and go after specific missions and projects. The Cyclon is one example where we’re able to have the capacity to innovate and drive topics forward, because we work as a partnership and as a team.
It’s challenging for a new brand to break out onto running shoe walls. Do you attribute On’s success to your innovative product or other factors? It starts with innovation. We always say we’re not making a shoe; we’re making a running feeling. We’re giving people an experience. Our CloudTec technology allowed us to give our friends and customers a differentiated experience, and we took that and added an extremely approachable design that crosses over not just from running but also into outdoor and Performance All Day, our lifestyle range. And then we’re adding the topic of sustainability and what has happened over time, thanks to technology, thanks to the design, is that our first runners started to appreciate the product not just for running, but they started to wear it all day and every day. On has grown out of running into the outdoor because that’s our Swiss heritage and into Performance All Day. We’re uniting the people that are inspired to move across all different segments.
Did you take a unique go-to-market approach that may have supported your fast growth? There are a couple of elements. First, On is a mouth-to-mouth recommendation brand. We grow with people recommending On to their friends, and then they recommend to their friends. It’s a grassroots-built movement that has grown through customer appreciation, and you can also see that in our NPS (net promoter score), which is 66 and one of the highest in the industry. At the same time, from the beginning, we’ve put our efforts into partnerships with key retailers in an authentic way. We’ve benefited from working closely with some premium retailers in the run space. This approach has led to the success that we’re seeing, and we’re committed to continuing that journey of the grassroots-built movement by partnering with the most important and most premium retail partners.
Is On evolving from a running brand to more of a performance footwear brand? On is a running brand. Our roots are in running. If we measure success, we want to be on as many feet as possible when counting runners along the Hudson River or in Central Park in Manhattan. This is who we are and where our heart is, but our technology and our design allow us to cross over in an authentic and performance-driven way into other areas, including outdoor and Performance All Day. We were able to bring a very light and very comfortable shoe into the lifestyle space. For example, The Rogerfranchise is our reinvention of the classic tennis silhouette. We’re adding technology, which comes with Cloudtec and our Speedboard, allowing the consumer to have a differentiated experience. On is a running brand and will stay a running brand, but we can move beyond running into other use cases.
What have you got planned for run specialty and the run category in the U.S.? You can expect more product to come that makes On more accessible to a wider group of consumers and have exclusive products planned for spring 2022 for run specialty, including a new iteration of the Cloudrunner and the Cloudmonster. We want to continue to grow with our run specialty partners. We also selectively added channels with a premium price and stable distribution that are value-adding to On, such as REI and Nordstrom. We will continue to have a very selective distribution, so don’t expect us to change anything there. We’re only going to work with premium channels that are price stable and are value-added to the brand.
What’s your retail strategy? Our first store opened in New York on Lafayette Street. We also have seven stores open in China. We’ll heavily grow with On stores in China, but outside of China, it’s about bringing an immersive customer experience to our fans and consumers. We plan to open On branded stores in key cities like London or Tokyo where we can have a huge impact in bringing that experience to life. At the same time, we’re very lucky and appreciative of the partnership that we’ve built with our wholesale partners, which allowed us to build over 1,000 shop-in-shops worldwide. That is another way to bring the On experience to consumers, and we also plan to expand these areas.
What’s On’s approach to apparel? What we’re doing in apparel is essentially similar to what we did in footwear. It’s around performance and technology. We’re bringing a unique set of materials to the collection with a unique design and working very hard on the sustainability side. We believe there’s enormous potential to grow the apparel category with roots in running that can also offer highly versatile products to be worn for different use cases out of running. The same apparel for running along the Hudson could be worn to quickly have a cup of coffee. We’re very happy with how it has been received by our customers, especially when we can bring it to life in a nice way in some of the shop-in-shops that we’re opening with our partners. We’ve seen a very positive acceptance, and it’s growing faster than our footwear.
Photos courtesy On Running/Marc Maurer
