ONON has kicked off FY24 positively, surpassing Q1 earnings and sales expectations and upgrading its revenue forecast for the year. Despite previous concerns due to foreign exchange (FX) challenges impacting Q4 results, the company has demonstrated resilient demand in its niche market. In Q1, with reduced FX headwinds and increasing demand, ONON achieved a record CHF 0.5 billion in revenue, maintaining strong margins and reaffirming its FY24 gross margin target at 60% and adjusted EBITDA margins between 16.0% and 16.5%.
ONON has capitalized on a shift in focus by one of its main competitors, NIKE (NKE, Financial), which has only recently sought to enhance its running portfolio. This strategic gap allowed ONON to attract customers and achieve a 20.9% year-over-year revenue increase—29.2% on a constant currency basis—to CHF 508.2 million. The company's growth was predominantly driven by its direct-to-consumer (DTC) channel, which now represents 37.5% of total revenue, bolstered by a new commercial app and a tripling of its membership base over the past two years. Meanwhile, wholesale channel growth was slower at 12.2% year-over-year, aligning with strategic shifts towards more premium offerings.
Geographically, ONON saw widespread growth. In the EMEA region, revenues rose by over 6.1% year-over-year, with the Americas and Asia Pacific regions posting significant gains of 22.0% and 68.6%, respectively, on a constant currency basis. Notably, the Tokyo store doubled its sales compared to the previous year. Looking ahead, ONON has raised its FY24 revenue forecast to CHF 2.29 billion from CHF 2.25 billion, reflecting a strong start to the year and diminishing FX concerns.
The Q1 performance of ONON highlights a sustained consumer interest in innovative performance footwear, challenging traditional market leaders like NIKE (NKE, Financial) and Under Armour (UAA, Financial). With ONON and Deckers Outdoor (DECK, Financial) tapping into consumer readiness to invest in quality sports apparel, ONON's strategic emphasis on its DTC channel and international market penetration positions it well for continued growth.
