On Running Reports 32% Sales Rise Despite Losses

Zurich, Switzerland — On Running, a prominent Swiss sportswear company, reported a 32% increase in sales for the second quarter of 2023. The company’s strong performance has led it to raise its full-year revenue guidance to 2.91 billion Swiss francs ($3.58 billion), slightly up from its earlier forecast of 2.86 billion francs ($3.52 billion).

Despite challenges with imports from Vietnam, On remains confident in its growth. The company also elevated its gross margin guidance to a range of 60.5% to 61%, surpassing its previous estimate. CEO Martin Hoffmann emphasized in a CNBC interview that demand from both wholesale partners and consumers has not diminished.

“We have a lot of confidence in our lifestyle business,” Hoffmann said. “We skewed the price increases more towards the lifestyle business, while trying to stay a bit more where we were on our running products.” He also noted that so far, there has not been a negative impact from the recent price increases.

On’s sales reached 749 million francs ($922 million) in the three months ending June 30, marking a significant rise from 568 million francs ($699 million) in the same period last year. However, the company posted a net loss of 40.9 million francs ($50.4 million), or 12 cents ($0.15) per share, compared to a profit of $30.8 million ($37.9 million), or 10 cents ($0.12) per share, in the previous year.

The loss was primarily attributed to fluctuations in foreign exchange rates. On has been on a growth trajectory, experiencing over 30% growth almost every quarter in 2023, and it continued to exceed Wall Street’s sales expectations.

On’s strategy includes balancing direct sales through its website and physical stores with wholesale revenue. This approach has allowed On to capture market share during a time when competitors like Nike have reduced their wholesale presence.

In the second quarter, On’s wholesale revenue was 441 million francs ($543 million), outpacing estimates of 429 million francs ($528 million). Direct sales also exceeded expectations, totaling 308 million francs ($379 million), compared to predictions of 279 million francs ($344 million).

Sales growth was evident across regions, with the Americas, Europe, the Middle East, Africa, and Asia-Pacific all surpassing expectations. Although On does not specify its performance in China, Hoffmann indicated that it has been a strong market, reporting approximately 50% growth in sales compared to the same quarter last year.

“The American and the Chinese consumer is very strong for On,” Hoffmann stated. “We have seen basically 50% same-store growth in our retail stores, even bigger growth in our e-commerce channel.”