Running shoe maker On Holding AG’s (ONON, Financial) stock price rose an impressive 7.6% in premarket trading Friday following better-than-expected fourth-quarter sales figures and optimistic guidance. At midday on Friday, shares were trading around $27.41, up 12.2%.
The Zurich, Switzerland-based company reported a net loss of 187.0 million Swiss francs ($200.05 million), or 0.60 francs per share, after a loss of 2.6 million francs, or 0.01 francs per share, in the prior-year quarter. Sales were 191.1 million francs, up from 124.3 million francs.
Executives said that manufacturing in Vietnam has returned to full capacity. The company’s spring/summer product rollout was rescheduled to the first instead of the fourth quarter. "Overall, we are fast-tracking the capacity ramp-up plan this year, and leveraging our close relationship with all factory partners," said Martin Hoffmann, co-CEO of On, in a statement. "This includes the expansion into Indonesia, where we just started production in a new facility to diversify our production network."
On experienced strong consumer demand across all regions, channels and product categories and delivered a record year with net sales of 724.6 million francs, a gross profit margin jump to 59.4% and an adjusted Ebitda margin of 13.3%.
Net sales increased by 53.7% in the fourth quarter of 2021 and by 70.4% in fiscal year 2021, with the direct-to-consumer business growing 76.7% in the fourth quarter and wholesale growing 39.3%. “This validates the strength of On’s multi-channel distribution, where wholesale and DTC channels are highly complementary,” the company noted.
On delivered a fourth quarter gross profit margin of 58.5%, up from 51.7% in the fourth quarter of 2020, and adjusted Ebitda of 11.2 million francs despite supply chain constraints, recurring Covid-19 restrictions in Europe and a planned shift of On's spring/summer product season launch from the fourth quarter of 2021 to the first quarter of 2022.
Strong pre-orders, coupled with increased visibility on the recovery of the supply chain environment, “provides even more confidence to meet higher than expected demand in the first half of 2022 and to return to hyper-growth in the second half,” management said.
Based on its elevated inventory position, the company said, executives expect to be able to meet a higher share of the demand from customers in the first half of 2022 and to drive higher growth than previously expected. On therefore updated its guidance for the full fiscal year 2022, and now expects net sales of at least 990 million francs, adjusted EBITDA of 130.0 million francs and a corresponding adjusted Ebitda margin of 13.1%.
David Allemann, co-founder and executive co-chairman of On, pointed out that global consumer demand continues to drive On’s strong growth. “On is carried by a rapidly expanding movement of millions who run, explore, travel near and far, lift their spirit and dream on. This allows us to make fast progress towards our long-term mission: to ignite the human spirit through movement.”
