On Holding AG (ONON), the Swiss sportswear company known for its On Running shoes, saw its shares climb on Tuesday following a strong second-quarter earnings report. Despite missing analyst expectations for earnings per share, the company exceeded revenue estimates, reporting $627.683 million in sales, surpassing the anticipated $561.038 million. This robust sales performance contributed to the positive market reaction, pushing ONON shares up by 6.90% to $42.29 at the close of trading.
The company’s profitability also demonstrated significant growth. Gross profit margin reached 59.9% in the second quarter, marking an increase from 59.5% in the same period last year. This improved profitability is further reflected in the substantial expansion of net income and adjusted EBITDA compared to the previous year.
On Holding attributed its positive performance to several key initiatives, including a multi-year partnership with Zendaya, the introduction of innovative technologies like LightSpray, and the opening of its largest retail location in Paris. David Allemann, Co-Founder and Executive Co-Chairman of On Holding, highlighted these initiatives as instrumental in driving growth.
The company’s financial strength is evident in its robust cash position. Cash and cash equivalents increased by 32% to CHF 652.4 million, up from CHF 494.6 million in the previous quarter. Additionally, net working capital saw a 14.3% rise to CHF 567.1 million, compared to CHF 496.2 million in the prior period.
Looking ahead, On Holding remains optimistic about its future prospects. The company reaffirmed its full-year forecast of at least 30% net sales growth on a constant currency basis. Considering the recent appreciation of the Swiss Franc, On Holding anticipates reported net sales of at least CHF 2.26 billion in 2024. Furthermore, the company expects to maintain a gross profit margin of around 60% and an adjusted EBITDA margin within the range of 16.0% to 16.5%.
The strong performance and positive outlook have solidified On Holding’s position as a leading player in the global sportswear market, signaling continued growth and innovation for the company in the coming quarters.
