By Ananya Mariam Rajesh
(Reuters) -On Holding beat analysts’ estimates for second-quarter revenue on Tuesday on strong demand from customers looking for trendy products but shares fell 8% premarket after the company reiterated its annual sales forecast.
The company maintained its 2024 net sales expectations of at least 30% growth, reflecting an impact from low stock and supply challenges at its Atlanta distribution centers that resulted in extended delivery times.
“We have experienced shipping delays, but we also experienced out-of-stock situations towards our DTC channel. And while we posted a record quarter, it could have been even stronger if we would not have had those impacts,” co-CEO and CFO Martin Hoffmann told Reuters.
The company’s second-quarter sales rose nearly 28% to 567.7 million Swiss francs ($655 million), compared with LSEG estimates of 560.9 million Swiss francs.
“We see a high share of full price sales and also I think we are very well-positioned on the inventory side, which doesn’t post a lot of pressure … for us it is always the full price business it’s the meaningful business in the long term,” Hoffmann said.
Roger Federer-backed On, which went public in 2021, has edged out sportswear giant Nike for shelf and online space at retailers like Dick’s Sporting Goods and Foot Locker in the running shoe category.
On’s shares have risen nearly 47% so far this year.
Customers have been more than willing to spend on comfortable and new products such as those made by On, New Balance and Hoka in the U.S. and Europe.
On has been building on the momentum and launched products in the running and trail categories such as Cloudmonster Hyper and Cloudrunner 2 and signed a multi-year partnership with actress Zendaya in the second quarter.
The company’s adjusted profit came in at 0.14 Swiss francs per share. Analysts were expecting the company to report 0.16 Swiss francs per share.
($1 = 0.8664 Swiss francs)
(Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Sriraj Kalluvila)
