On Holding Q2 2025 Earnings Report
On Running Soars After Strong Q2 Results and Upbeat Outlook
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On Holding AG (NYSE: ONON), the Swiss sportswear brand challenging Nike’s dominance, saw its shares jump nearly 17% in premarket trading Tuesday following a strong second-quarter earnings report and an optimistic outlook for the remainder of the year. The company reported revenue growth of 32% and reaffirmed its confidence despite a reported net loss, fueled largely by foreign exchange headwinds.
Q2 Performance: Beating Expectations Across the Board
On exceeded Wall Street’s expectations for the second quarter, demonstrating robust growth in both wholesale and direct-to-consumer channels. Key highlights include:
revenue: 749 million Swiss francs, surpassing the anticipated 705 million francs.
Wholesale Revenue: 441 million francs, exceeding estimates of 429 million francs.
Direct-to-Consumer Revenue: 308 million francs, beating expectations of 279 million francs.
Regional Growth: Sales in the Americas, Europe, the Middle East and Africa, and the Asia-Pacific region all outperformed projections.
* China Growth: A particularly strong performance in China, with sales increasing approximately 50% year-over-year.
Despite the notable revenue figures,On reported a net loss of 40.9 million francs (12 cents per share), compared to a net income of 30.8 million francs in the same quarter last year.This loss was primarily attributed to fluctuations in exchange rates between the U.S. dollar and the Swiss franc. The adjusted loss per share was 9 cents in francs.
On successfully raised prices by approximately 6-6.5% on July 1st to mitigate rising costs, particularly those associated with its supply chain, wich relies on Vietnam for roughly 90% of its goods. Importantly,the company has not observed any slowdown in demand from either wholesale partners or consumers.
CEO Martin Hoffmann explained the pricing strategy, stating, “We have a lot of confidence in our lifestyle business, so we skewed the price increases more towards the lifestyle business, while trying to stay a bit more where we were on our running products. So far, we don’t see negative impact from the price increases.” This demonstrates On’s ability to maintain pricing power and brand appeal even in an inflationary environment.
Challenging Nike and Building Brand Momentum
Founded in Switzerland in 2010, On has rapidly established itself as a premium sportswear brand, gaining market share from established players like Nike, particularly within the running segment.while still considerably smaller than Nike in terms of overall sales, On has cultivated a reputation for innovation – a quality that Nike has recently faced criticism for lacking.
The company’s consistent sales growth, exceeding 30% in nearly every quarter since 2023, underscores its increasing popularity. This growth is fueled by a strategic balance between direct sales (through its website and retail stores) and wholesale partnerships. Unlike Nike’s recent pullback from wholesale channels, On has actively filled that void, strengthening relationships with retailers and expanding its own retail footprint.
Future Outlook and Growth Opportunities
On’s management team remains optimistic about the company’s future.The brand’s strong performance in key markets like the Americas and China, coupled with its innovative product offerings and effective pricing strategy, positions it for continued growth.
Hoffmann highlighted the strength of the American and Chinese consumer, noting a 50% increase in same-store growth and even larger gains in its e-commerce channel within China.
Despite relatively low brand awareness in certain global regions, On possesses significant potential for further expansion. The company’s ability to consistently deliver mid-double-digit sales growth in a relatively soft sneaker market suggests a promising trajectory for the years to come. Investors are clearly responding positively, as evidenced by the substantial premarket surge in share price.