Key Takeaways:
On Holding AG (NYSE: ONON) reported first-quarter net profit surged 82.2% after record sales and expanding margins, prompting the Swiss sportswear maker to raise its full-year profitability forecast.
"The record sales and profits are a testament to the strong demand for our products across the globe," a company spokesperson said in the earnings release. The results beat Wall Street expectations for both revenue and profit.
The Zurich-based company's key financial results for the quarter ended March 31:
The performance was driven by a strict full-price strategy and soaring growth in the Asia-Pacific region, which helped offset a slowdown in the Americas. The company's gross profit margin expanded to 64.2% from 59.9% a year earlier, a key factor behind the decision to lift its full-year gross margin target to at least 64.5%.
On's growth profile showed significant regional divergence. Net sales in the Asia-Pacific region jumped 61.4% at constant currency to 174 million CHF, making it the fastest-growing market. In contrast, the Americas, On's largest market, saw sales grow 17.1% at constant currency to 450.7 million CHF, facing intense competition from brands like Nike Inc. and Hoka. Sales in the EMEA region grew 25.6%.
By channel, direct-to-consumer (DTC) sales increased 28.7% at constant currency, outpacing the 25.1% growth in the wholesale channel. This reflects the company's strategy of expanding its own retail footprint, with new stores recently opened in Seoul, Shenzhen, and London.
The company's core shoe business saw sales rise 24% to 763.7 million CHF. The smaller apparel division showed strong momentum, with sales jumping 57.5% to 55.3 million CHF.
Despite the strong quarter, On faces headwinds from higher US tariffs on products imported from Vietnam and a more promotional retail environment. The company maintained its full-year revenue growth forecast of at least 23% at constant currency.
The strong profit beat and raised margin guidance signal management's confidence in its brand power, even with a notable slowdown in its largest market. Investors will watch the company's second-quarter results to see if growth in the Americas re-accelerates and if the apparel segment can continue its rapid expansion.
This article is for informational purposes only and does not constitute investment advice.
