Swiss shoemaker On Holding AG reported earnings that topped estimates amid fast growth in US sneaker sales.
The Roger Federer-backed company posted third-quarter earnings growth of 44%. The stock rose 7.1% in pre-market trading in New York.
On’s US growth is fueled by an expanding lineup of footwear and increasing availability at retailers like Dick’s Sporting Goods Inc. The company is also building out its direct-to-consumer operations, helping it take market share from bigger rivals like Adidas AG, Nike Inc. and Puma SE.
Third-quarter sales reached 481 million francs ($533 million), higher than analysts had expected. Revenue jumped 61% in the Americas and 72% in Asia-Pacific.
Founded just over a decade ago, On has expanded rapidly across Europe and North America thanks in part to strong uptake from an ever growing network of wholesale partners and specialty running stores. Now, it’s taking on new partners at a slower rate while pushing for faster growth from its own direct-to-consumer business, whether that’s through e-commerce or company-owned stores.
On is already removing its products from about 200 locations across Germany, Austria and Switzerland that focus more on comfort-oriented footwear than athletic shoes. It’s looking to sharpen its image in the region as a premium sports brand, Co-Chief Executive Officer Martin Hoffmann said in an interview.
“It’s important to put our capacity on the doors where we are really able to reach the runner, reach the tennis player, reach the training customer, reach the outdoor customer,” he said. “That’s the correction that we’re making.”
The company made similar moves a few years back in the US, where it’s now looking to grow its presence at key large-scale merchants. It’s currently in about 170 Dick’s Sporting Goods locations, for instance, and expects to add another 40 or 50 early next year. It’s already in about 200 Foot Locker Inc. stores in the country, with plans to add another 50 next year, Hoffmann said.
While On keeps growing fast, it’s seeing less momentum from holiday shopping in the US and Europe than last year, Hoffmann said. The company is refraining from lowering prices on its products, he said, which some of its rivals are resorting to.
On nudged its full-year sales guidance slightly higher, to at least 1.79 billion francs, in line with analysts estimates.
Shares in On have jumped 55% this year, far outperforming larger competitors Nike and Puma. That’s putting pressure on the company to keep reporting strong growth to justify its share performance.
(Updates with shares in second paragraph)
