On Holding (ONON, Financial) reported flat trading after missing EPS expectations in its Q3 report, though it achieved a record revenue increase of 32.3% year-over-year to CHF 635.8 million, surpassing forecasts.
- Direct-to-Consumer Growth: Sales in the direct-to-consumer (DTC) channel, including online and company-owned stores, surged 49.8% year-over-year to CHF 246.7 million, now making up 38.8% of total sales compared to 34.3% last year. This growth is attributed to increased global brand awareness.
- Wholesale Performance: Wholesale channel sales rose by 23.2% year-over-year to CHF 389.1 million. The growth is driven by expanding product offerings in running and new categories, enhancing shelf space.
- Brand Awareness: ONON's presence at the 2024 Olympics and partnerships with celebrities like Zendaya have significantly boosted brand awareness. In the US, brand recognition has doubled, reaching nearly 20%, while in Paris, it nearly tripled year-over-year.
- Innovation: The company's LightSpray technology is noteworthy, creating a seamless shoe upper without glues and seams, reducing waste. The technology was showcased during NYC marathon week, attracting thousands to its On Labs pop-up.
- Product Launches: ONON is optimistic about its new Cloudsurfer Next and Cloudrunner 2 models, which are gaining rapid popularity.
- FY24 Outlook: Bolstered by strong Q3 results, ONON raised its FY24 sales growth outlook to at least 32% in constant currency, anticipating continued demand and overcoming FX headwinds in Q4.
Despite the EPS miss, On Holding's Q3 performance was robust, with standout DTC sales and heightened brand awareness thanks to strategic marketing efforts. The innovative LightSpray technology and new product lines are poised to further boost the brand. ONON's trajectory is reminiscent of an early-stage Deckers (DECK, Financial), invigorated by its Hoka brand. 2024 has been favorable for ONON's stock performance.
