Shares soar after running brand reports first earnings in history – Footwear News

On, the fast-growing Swiss running brand, has just released its quarterly results for the first time as a state-owned company.

In the third quarter, net sales growth of 68% to 218.0 million Swiss francs, or approximately $ 234 million, and net profit of 13 million Swiss francs, or approximately $ 14 million, were reported.

Shares of the newly public track and field company rose as much as 22% by early afternoon on Tuesday.

Backed by tennis champion Roger Federer, On sold 31.1 million shares for $ 24 each when it went public in September, bringing the company’s value to over $ 6 billion, Reuters reported. In its SEC filing, On described itself as “one of the fastest growing athletic sports companies in the world,” with net sales growing at a compound annual growth rate of 85%. We are currently sold in approximately 8,100 retail stores around the world.

According to the company, 36.6% of its net sales in the first six months of 2021 were generated through direct-to-consumer channels, primarily the company’s website. In the third quarter, DTC net sales increased 93%.

In an interview with FN in September, On co-CEO Marc Maurer said the company plans to strengthen its presence in markets critical to long-term success, expand its physical presence in key cities. and make progress in sustainable innovation. While analysts initially had mixed predictions for the shoe brand, On’s latest earnings have prompted strong recommendations from some companies.

“On’s third-quarter report had little to no flaws,” Baird analysts wrote in a note Tuesday, noting that headwinds related to plant closures in Vietnam began to ease since their release. reopening at the beginning of the month. Two new factories will also be opened in Indonesia in 2022, further alleviating supply limitations.

Stifel analyst Jim Duffy has expressed optimism that sales will pick up once factories pick up their pace.

“Overall, demand indicators are exceptionally strong and growth disruptions in Vietnam are less than feared,” Stifel analysts wrote in a note. “We remain excited about the brand’s capacity for long-term growth. “

To meet growing demand, On executives said in a call with investors that they are investing in air freight and working with business partners to adjust launch dates accordingly.

Co-CEO Marc Maurer said the company is diversifying sourcing and manufacturing to more countries to keep the product closer to consumers around the world. He also said that there was a desire to further automate the manufacturing process to reduce its addiction on the work.

“We are convinced that the supply chain disruptions in Vietnam are temporary”, Co-CEO and CFO Martin Hoffmann said on a call with investors. “And that our pricing power will allow us to offset the increase in transport and distribution costs in the medium and long term with selective price increases. “

As a running brand, On enjoys a boom in health and fitness in the pandemic era that is still up to the task. Saucony, Adidas and Brooks all posted remarkable numbers in their third quarter results last week. Brooks, a leader in the running category, reported third quarter year-over-year revenue growth of 24%, driven by gains from the Adrenaline GTS, Ghost and Glycerin franchises, which grew by 50%. % compared to 2020.

According to On co-founder and executive co-chair Caspar Coppetti, the company won’t be hurt when consumers return to the gym, as many people will likely continue to run, even on a treadmill.

“We are in a key position where we can not only grow with the industry, but we can also take significant market share given the way we have been able to manage our supply and plan for hyper growth until 2022” , Coppetti said.

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