Key Takeaways:
- Q2 net sales of 850.3 million francs missed the 878.16 million franc consensus
- Adjusted EPS of 0.35 francs edged past the 0.34 franc estimate
- Full-year growth guide cut to low-20% range from at least 23%
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On Holding shares tumble 19% as Q2 sales miss estimates
On Holding AG reported second-quarter net sales of 850.3 million Swiss francs, missing the 878.16 million franc consensus and sending shares down 19 percent.
"We are not sprinting for short-term volume. We are deliberately engineering for the multi-decade value of a premium brand," co-CEO David Allemann said on the post-earnings call.
Adjusted earnings of 0.35 francs per share edged past the 0.34 franc estimate, while the Zurich-based company raised its full-year gross profit margin forecast to at least 65 percent from 64.5 percent. Asia-Pacific contributed more than one-fifth of total sales for a fourth straight quarter, and apparel constant-currency sales rose 56.2 percent. Those gains failed to offset softer overall revenue as higher US tariff costs and cautious consumer spending weighed on the premium sportswear maker.
On widened its full-year net sales guidance to 3.47 billion to 3.56 billion francs on a constant-currency basis but now expects growth in the low-20 percent range, down from an earlier forecast of at least 23 percent. The revised outlook trails the 24.7 percent consensus estimate cited by Citi and, at current exchange rates, sits below the market's 3.56 billion franc expectation.
Citi analysts said management's decision to limit wholesale shipments to preserve full-price selling and prepare for product launches could weigh on second-half sales. Jefferies analyst Randal Konik cautioned that recent margin gains may prove hard to sustain as growth slows and inventories stay elevated, raising the odds of downward earnings revisions.
The stock has lost about a third of its value this year, trading at $31.30 with a market capitalization near $12.4 billion, even as On continues to take share from larger rivals Nike and Adidas. The 19 percent drop puts shares near their 52-week low of $31.41, testing support after the company's growth outlook was cut. Investors will watch whether the raised margin target holds and whether Asia-Pacific and apparel momentum can offset wholesale restraint in the second half.
This article is for informational purposes only and does not constitute investment advice.
