Roger Federer-backed shoemaker On Holding AG raised its full-year profit forecast after seeing a sales boom in North America and reducing reliance on air freight.
Net sales are likely to reach 1.1 billion Swiss francs ($1.2 billion) in 2022, up from a previous target of 1.04 billion Swiss francs, the Zurich-based company said in a statement on Tuesday. This is slightly higher than the average analyst estimate.
The new athletic shoe brand is looking to expand beyond its previous cult following and seek to appeal to younger consumers. Founded in 2010, the company is known for the distinctive tubular cushions on the soles and the support of Swiss tennis champion Federer, who became an investor in 2019.
Building on its Swiss roots, the company’s biggest market is North America, where second-quarter sales more than doubled from a year ago to 182 million Swiss francs. There was also a growth rate of 18% in Europe and 52% in Asia-Pacific.
“The United States is the engine of growth right now,” Martin Hoffmann, co-CEO and CFO, said in an interview.
Shares of On have risen about 2% since the company went public in New York nearly a year ago. That outperformed its biggest rivals, including Adidas AG, Puma SE and Nike Inc., whose shares have all fallen over the past year.
Awareness in the United States
While the U.S. listing has helped boost brand awareness in the country, On is also benefiting from increased sales at retail outlets like Foot Locker Inc. and Nordstrom Inc., said Hoffman.
The company has raised prices in the United States by around $10 on newly launched products and plans to increase the cost of existing sneaker models next spring. A similar strategy is envisaged for Europe, with the exception of Switzerland, he said.
“We are a premium brand, so we clearly see that we have pricing power in the market,” said the co-CEO.
While On has garnered a lot of interest from consumers looking to wear casual sneakers, it has gained the most market share this year in the leading brand for serious runners. That’s thanks, in part, to the new, highly cushioned Cloud Monster and the more support-focused Cloudrunner, Hoffmann said.
The company relied more on air freight to deal with supply shortages resulting from pandemic-related factory shutdowns in Asia last year. It expects to reduce that for the rest of this year, reserving the transportation method to ensure availability of its most recently launched products.
By Tim Loh
About Surge in Market Debut
The company raised $746.4 million in its IPO after its shares beat their target, before climbing another 46% to end the day at $35.