Roger Federer-backed shoemaker On Holding AG raised its full-year profit forecast after a strong increase in sales in North America and a decrease in reliance on air freight.
Net sales are likely to reach 1.1 billion Swiss francs ($1.2 billion) by 2022, compared to a previous target of 1.04 billion Swiss francs, the Zurich-based company said in a statement on Tuesday. That’s slightly higher than the average analyst estimate.
The start-up athletic shoe brand aims to move beyond its previous cult following and attract younger consumers. Founded in 2010, the company is known for its signature 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 largest market is North America, where Q2 sales more than doubled from a year ago to 182 million Swiss francs. On also registered a growth rate of 18 percent in Europe and 52 percent in Asia-Pacific.
“The US is currently the growth engine,” Martin Hoffmann, co-chief executive officer and chief financial officer, said in an interview.
Shares of On are up about 2 percent since the company’s New York IPO nearly a year ago. That’s better than bigger rivals, including Adidas AG, Puma SE and Nike Inc., whose shares have all fallen in the past year.
While the U.S. listing has helped boost brand awareness in the country, On is also benefiting from higher sales at stores such as Foot Locker Inc. and Nordstrom Inc., Hoffmann said.
The company has raised prices in the US by about $10 for newly launched products and plans to increase the cost of existing sneaker models next spring. A similar strategy is being considered for Europe, except in Switzerland, he said.
“On is a premium brand, so we clearly see that we have pricing power in the market,” said the co-CEO.
While On has attracted a lot of interest from consumers who want to wear casual sneakers, it has gained the most market share in the core brand of serious runners this year. That’s in part thanks to the new, heavily muted Cloud Monster and the more support-focused Cloudrunner, Hoffmann said.
The company relied more on air freight to make up for inventory shortages caused by pandemic-related plant closures in Asia last year. It expects to reduce that in the rest of this year, reserving the mode of transportation to ensure availability of its most recently launched products.
By Tim Loho
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