On's FY22 sales accelerate, cross one billion Swiss francs

On Holding AG’s fiscal 2022 net sales increased 68.7 percent to 1,222.1 million Swiss francs with net sales through the DTC sales channel increasing by 61.4 percent to 445.1 million Swiss francs and net sales through the wholesale sales channel increasing by 73.1 percent to 777 million Swiss francs.

For the fourth quarter, the company’s net sales increased 91.9 percent to 366.8 million Swiss francs; net sales through the direct-to-consumer sales channel increased 76.4 percent to 149.4 million Swiss francs and net sales through the wholesale sales channel increased 104.3 percent to 217.3 million Swiss francs.

Commenting on the trading update, Martin Hoffmann, the company’s co-CEO and CFO, said: “After navigating through a challenging 2022, including supply shortages, tight production capacities and disruption of global trade lanes, we are looking forward to a great year with largely normalised operations. We have made significant progress in many areas in the 18 months since our IPO, which will set us up for ongoing success and market share gains."

Financial highlights of On’s FY22 results

The company said, net sales in North America, Europe, Asia-Pacific and Rest of World increased 80.3 percent to 738.5 million Swiss francs, 36.1 percent to 354.3 million Swiss francs, 87.7 percent to 80.2 million Swiss francs and 310.5 percent to 49.1 million Swiss francs, respectively.

Net sales from shoes increased 70.9 percent to 1,167.5 million Swiss francs, net sales from apparel increased 30.2 percent to 47.3 million Swiss francs and net sales from accessories increased 48.3 percent to 7.4 million Swiss francs.

Gross profit for the year increased 59.2 percent to 684.9 million Swiss francs; gross profit margin decreased to 56 percent from 59.4 percent; while net income increased to 57.7 million Swiss francs from a net loss of 170.2 million Swiss francs and basic EPS and diluted EPS Class A increased to 0.18 Swiss francs.

Adjusted EBITDA increased 71.4 percent to 165.3 million Swiss francs; adjusted EBITDA margin increased to 13.5 percent from 13.3 percent; adjusted net income increased to 90.6 million Swiss francs and adjusted basic and diluted EPS Class A (CHF) increased to 0.29 from 0.11.

“Finishing our first full year as a public company with net sales exceeding 1.2 billion Swiss francs and a net income of 57.7 million Swiss francs is a huge testament to the incredible work that our team continues to do every day. Running will continue to be our focus in 2023, but we are also extremely excited to announce On is increasing its presence on the tennis court too," added David Allemann, Co-Founder and Executive Co-Chairman of On.

Review of On’s Q4 performance

Fourth quarter net sales in North America, Europe, Asia-Pacific and Rest of World increased 81.5 percent to 242.1 million Swiss francs, 80.6 percent to 79.6 million Swiss francs, 103.8 percent to 21.6 million Swiss francs, and 680.5 percent to 23.4 million Swiss francs, respectively.

Net sales from shoes, apparel and accessories increased 96.7 percent to 353.4 million Swiss francs, 15.4 percent to 11.5 million Swiss francs and 30.9 percent to 1.8 million Swiss francs; respectively.

Gross profit for the quarter increased 91.9 percent to 214.6 million Swiss francs; gross margin remained unchanged at 58.5 percent; net loss changed to 26.4 million Swiss francs from loss of 187 million Swiss francs; net loss margin changed to negative 7.2 percent from negative 97.8 percent and basic and diluted earnings per share increased to negative 0.60 Swiss francs from negative 0.08 Swiss francs.

Adjusted EBITDA increased 451.7 percent to 61.8 million Swiss francs; adjusted EBITDA margin increased to 16.8 percent from 5.9 percent; adjusted net income increased to 7.5 million Swiss francs and adjusted and diluted basic EPS Class A increased to 0.02 from negative 0.04 Swiss francs.

On expects Q1 sales growth of 61 percent

Compared to a supply constrained first quarter of 2022, On expects a net sales growth rate of 61 percent in the first quarter of 2023 versus the prior year period.

The company expects to reach net sales of at least 1.7 billion Swiss francs for the full year 2023. This represents a year-over-year growth rate of 39 percent, which takes into account approximately 300 basis points of the current foreign exchange headwinds and therefore reflects a currency-neutral growth rate of 42 percent.

Together with a strong inflow of recent products, which the company said, will enable a continued high share of full price sell-through, On foresees the continuation of the gross profit margin expansion towards the stated mid-term target of 60 percent. Considering current FX rates, On currently anticipates a full year 2023 gross profit margin of approximately 58.5 percent.

The company expects its adjusted EBITDA margin for the full year 2023 to increase to 15 percent.