Swiss shoemaker On Holding touted early Tuesday an all-time record in terms of sales and profit margin in its Q3 results. However, ONON stock trimmed early gains after earnings stopped short of forecasts.
On Holding reported a decline in earnings to 17 cents per share, from 22 cents last year, while FactSet expected flat year-over-year earnings. Net sales increased by about 34% to $723 million, which cleared analysts estimates for $702 million.
Despite the bottom-line decrease, On's gross profit margin reached 60.6% for the quarter. That marked its highest level since its September 2021 IPO. The increase was driven by growth in its direct-to-consumer channel and a "disciplined approach to full-price sales." The company noted DTC channel saw sales increase 49.8% for the quarter. The DTC channel's share of sales accelerated to 38.8% for Q3, up 450 basis points from last year.
On Holding added that brand awareness for its running shoes boomed in recent months, fueled by a strong presence at the Paris Olympics and the success of On athletes, its new partnership with Zendaya, and coverage of its LightSpray shoe technology.
"Our commitment to innovation and excellence has allowed us to capture this demand and deliver outstanding performance, particularly for our DTC channel," Co-CEO and CFO Martin Hoffmann said in the release. "The resulting net sales and profitability ahead of our expectations puts us in a position to significantly increase our outlook for the full year 2024, and fuels our confidence as we head into the holiday season and continue to shape the future of sportswear."
On Holding raised its full-year net sales guidance to at least 32% growth, which implies sales of 2.29 billion Swiss francs for the year ($2.599 billion). The company now expects to achieve a gross profit margin of 60.5% for the year, with an adjusted EBITDA margin at the upper end of its previously guided range of 16% to 16.5%.
FactSet analysts expect On's full-year earnings increase 147.5% to 99 cents per share on 27% revenue growth to $2.594 billion.
On Holding Stock
ONON stock eased a fraction Tuesday, after slid 2.5% in early trade. On Holding stock is trading just below a buy zone for a flat base.
Shares climbed above the 52.80 buy point for the pattern on Monday.
On Holding has rallied more than 95% so far this year and is trending toward its record high of 55.87 from November 2021.
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