- Athletics brand On reported third-quarter net sales increased 46.5% year over year to 480.5 million Swiss francs ($539.4 million at the time of publication), according to a Tuesday press release. The company’s direct-to-consumer net sales increased 54.6% to 164.7 million Swiss francs while wholesale net sales increased 42.6% to 315.7 million Swiss francs.
- On’s net income for the quarter grew nearly 185% to 58.7 million Swiss francs and gross profit margin increased from 57.1% to 59.9%.
- The brand increased its full-year outlook, with net sales expected to reach 1.79 billion Swiss francs at a full-year growth rate of over 46%, compared to its previously projected 1.76 billion Swiss francs. Driven by DTC growth, On expects a fourth-quarter growth rate of 21% with a wholesale growth rate in the high single digits.
As On strategically grows its DTC channels, the brand has reported yet another record quarter.
“The third quarter has not only been the seventh consecutive record top-line quarter, but also our most successful quarter in history across numerous measures,” Martin Hoffmann, co-CEO and CFO of On, said in a statement. “We are planning to add less additional wholesale doors in the future and to focus on our existing wholesale partners and our own DTC channels, E-com and own retail. With the increased outlook for the full year 2023 and our recently announced Dream On vision for 2026, we are heading into the holiday season with a lot of confidence and are very excited for the road ahead."
The company’s latest store openings in Miami and London showcase the brand’s increased focus on apparel. Its Miami brick-and-mortar store has a 23% apparel share and London holds 19% for the category, co-founder and Executive co-Chairman Caspar Coppetti said on a call with analysts Tuesday.
For the upcoming holiday season, Hoffmann told analysts that the brand saw a good start during the month of October, though consumer confidence has changed since last year.
“We clearly see that we are winning market share in the current environment,” Hoffmann said on the call. “Last year was an exceptionally strong holiday season, so significantly above what we had seen in previous years. We see less enthusiasm this year and this is also what we hear and see from our retail partners. But at the same time, we continue to grow strongly and we maintain a full-price position.”
Though the brand continues to focus on DTC growth, some analysts said On’s latest earnings results are thanks in part to wholesale channels.
“On's strong brand momentum in a softer US market ... was again reflected in its 3Q23 results,” analysts at Telsey Advisory Group led by Cristina Fernández said in emailed comments. “We attribute On's performance to increased brand awareness, success with new product introductions, and expanded distribution with wholesale partners, such as Dick's Sporting Goods, Foot Locker, and JD Sports.”
Hoffmann said on the call that On plans to increase its existing presence with wholesale partners and “carefully expand into new locations.” On executives said it is the No. 3 brand at Fleet Feet, and the brand plans to add around 25 doors per quarter with some of its existing wholesale accounts.
“We're the most premium brand for most of our partners and that means we're also the most profitable brand for them,” Coppetti said on the call. “They're strategically invested in the On brand. And if anything, we expect that in a more difficult environment, the brand will gain versus our competitors.”