On Holding beat analysts’ estimates for second-quarter revenue on Tuesday due to strong demand from customers looking for trendy products. However, shares fell 8% in premarket trading after the company reiterated its annual revenue forecast.
The company maintained its 2024 revenue guidance of at least 30% growth, reflecting the impact of low inventory and delivery difficulties at its Atlanta distribution centers, which resulted in longer delivery times.
“We experienced delivery delays, but also out-of-stock situations with our DTC channel. And although we had a record quarter, it could have been even stronger if we hadn’t had these impacts,” Co-CEO and CFO Martin Hoffmann told Reuters.
The company’s second-quarter revenue rose nearly 28% to 567.7 million Swiss francs ($655 million), compared to LSEG estimates of 560.9 million Swiss francs.
“We see a high proportion of full-price sales and I also think that we are very well positioned on the inventory side, which does not exert a great deal of pressure … for us, the full-price business is always the long-term important business,” said Hoffmann.
Roger Federer-backed On, which went public in 2021, has edged out sportswear giant Nike for shelf and online space at retailers such as Dick’s Sporting Goods and Foot Locker in the running shoe category.
On shares have risen nearly 47% so far this year.
Customers were more than willing to spend on comfortable and new products like those from On, New Balance and Hoka in the US and Europe.
On has built on that momentum, launching products in the running and trail categories such as Cloudmonster Hyper and Cloudrunner 2 and signing a multi-year partnership with actress Zendaya in the second quarter.
The company’s adjusted earnings were 0.14 Swiss francs per share. Analysts had expected 0.16 Swiss francs per share. ($1 = 0.8664 Swiss francs) (Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Sriraj Kalluvila)