Key Highlights
- Shares of ONON plummeted over 13% during premarket hours following disappointing Q2 sales figures
- Second-quarter sales totaled CHF 850.3 million, falling short of the CHF 881.4 million analyst forecast
- Earnings per share of CHF 0.31 exceeded the CHF 0.29 projection
- Direct-to-consumer sales surged 34.3% on a constant currency basis across all geographic markets
- Annual revenue forecast of CHF 3.47–3.56 billion aligned with or marginally trailed consensus projections
Shares of On Holding plummeted over 13% during Monday’s premarket session after the Swiss athletic footwear and apparel maker reported second-quarter sales figures that failed to meet analyst projections.
Second-quarter sales climbed 21.6% on a constant currency basis to CHF 850.3 million, falling below the Wall Street consensus forecast of CHF 881.4 million.
On the profit front, earnings per share registered CHF 0.31, surpassing the CHF 0.29 projection. The results presented investors with contrasting signals.
While the revenue figure disappointed, profit margins remained robust. Gross margin expanded to 65.4%, marking a 3.9 percentage point improvement versus the prior year. Management highlighted that this performance was delivered while completely absorbing elevated U.S. tariff costs, without any tariff reimbursements factored in.
Adjusted EBITDA totaled CHF 168.1 million, with the corresponding margin expanding to 19.8% from 18.2% in the year-ago period.
Direct Sales and Clothing Categories Fuel Expansion
The direct-to-consumer segment emerged as a standout performer. DTC sales jumped 34.3% on a constant currency basis and exceeded projections in all regional markets.
Apparel revenue skyrocketed 56.2% on a constant currency basis, maintaining its momentum as the faster-growing category compared to footwear.
The Asia-Pacific region now accounts for more than 20% of worldwide sales, with particularly strong performance in Japan, South Korea and Greater China.
On reported that shoppers aged 34 and younger now represent over one-third of its total customer base. The Cloudtilt product line has been instrumental in attracting this younger demographic.
Co-CEO and company founder David Allemann emphasized that the quarterly performance demonstrates the brand’s ability to expand while maintaining its premium market position.
“This financial strength allows us to reinvest in what drives our long-term success: authentic brand connections, premium customer experiences, and, above all, continuous performance innovation,” Allemann said.
Annual Guidance and Projections
Looking ahead to the full fiscal year, On anticipates sales growth in the low-20% range when measured on a constant currency basis.
Based on current exchange rates, this guidance points to annual revenue between CHF 3.47 billion and CHF 3.56 billion. The upper bound of this range aligns with the CHF 3.56 billion analyst consensus.
Management expects the direct-to-consumer channel to deliver stronger growth than the wholesale segment during the second half of the year.
The company projected full-year gross margin of at least 65.0% and adjusted EBITDA margin between 19.5% and 20.0%.
The sharp premarket decline exceeding 13% occurred despite the earnings beat and impressive margin expansion, with the revenue shortfall appearing to trigger the selloff among investors.
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