On Holding, based in Zurich, achieved record Q3 sales and its strongest profit margins to date. The brand is leveraging a high-end strategy to expand its global footprint and diversify its product lines.
The 72.6 percent gross profit margin fueling On's luxury pivot
On Holding is proving that consumers are willing to pay a premium for performance and design, even in a volatile economy. according to the report, the company's gross profit margin hit 72.6 percent in the third quarter, a significant jump from 65.7 percent the previous year. This financial success is rooted in what CFO Frank Sluis describes as a "premium playbook," where the company avoids heavy discounting to maintain brand prestige.
This strategy has resulted in record sales of 931.4 million Swiss francs, or approximately $1.1 billion. While many sportswear brands are relying on promotions to move inventory, On Holding has maintained full-price selling, which has allowed the company to increase its net income by 36.9 percent to 162.8 million Swiss francs. this financial cushion provides the capital necessary for On Holding to invest in new technology and physical retail stores.
How the Zendaya python-print collection drove a 38.7 percent apparel surge
On Holding is successfully transitioning from a footwear-only brand to a full lifestyle label, with women's apparel leading the charge. As the report notes, apparel sales rose 38.7 percent, largely driven by the latest collection featuring Zendaya. The python-print designs have become a major catalyst for growth, helping the brand capture a more fashion-forward demographic that values the intersection of athletics and internet-culture aesthetics.
The brand's ambition for clothing is aggressive; Frank Sluis stated that the goal is to grow apparel revenue from its current 300 million francs to 1 billion francs. The potential for this shift is already visible in specific markets. For instance, at a recently opened store in Bondi, Australia, On Holding adopted an "apparel-first" layout, resulting in clothing accounting for 30 percent of total sales at that location.
From Ben Shelton's exit to Kylian Mbappé's Chinese market controversy
The brand's growth is not without friction, particularly regarding its high-profile athlete roster. On Holding recently confirmed that American tennis star Ben Shelton will leave the company at the start of the year, reportedly to join New Balance. While On Holding maintains strong ties with Roger Federer and Iga Swaitek, the departure of the number four-ranked player suggests a misalignment in partnership terms.
Simultaneously,On Holding is expanding into soccer with the signing of Kylian Mbappé as the face of the category, supported by director Thierry Henry. However, this move comes with geopolitical baggage.. The report highlights that Mbappé previously faced significant backlash from Chinese consumers following comments regarding a Chinese dictator, believed to be Mao Zedong. Given that Asia-Pacific sales grew by 31.1 percent this quarter, the brand must navigate this cultural sensitivity carefully to maintain its momentum in the region.
The $7 billion revenue target and the upcoming leap into golf
On Holding is positioning itself to fill the void left by struggling incumbents like Nike and Under Armour . The company has set a bold target of hitting $7 billion in yearly revenue by 2029. A key part of this expansion involves entering the golf market next year, where the company claims to have "cracked the code" by offering a shoe that balances stability and comfort without compromise.
Despite these ambitions, several critical details remain unverified. It is currently unclear how On Holding plans to specifically mitigate the negative sentiment surrounding Kylian Mbappé in China, or if the loss of Ben Shelton will impact their visibility in the U.S. tennis market. Furthermore, while the company reports strong "sell-outs" for the Cloudsurfer 3, the long-term sustainability of a zero-discount model in a declining global lifestyle market remains to be seen.
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