Dive Brief:
- Swiss shoe brand On reported a robust Q1 driven by 39% year-over-year net sales growth in its DTC channel. The segment now accounts for over a third, or 37.5%, of On’s total net sales, according to a company press release.
- Total net sales were 508.2 million Swiss francs (about $562 million at press time), which represents a 20.9% year-over-year increase and is the first time the brand has surpassed 500 million Swiss francs in one quarter. Net income grew 106% to 91.4 million Swiss francs in Q1, which was also a quarterly record.
- On will open a second store in Paris ahead of the summer Paris Olympics, On executives said during Tuesday’s earnings call. On’s two stores in Paris will serve as hubs for the running community during the global event, which takes place from July 24 to Aug. 11.
Dive Insight:
On continued to expand its retail footprint globally and resized its entire apparel collection in Q1, which has already resulted in lower return rates. The brand is launching training in August and has debuted its first apparel collection in tennis and first commercial app.
In March, the Swiss apparel and footwear brand announced plans to expand its global presence, adding 100 additional stores over the coming years.
In Q1, On opened stores in Berlin and Portland, Oregon, bringing its store count to 50 globally, 34 of which are owned and operated by On. The brand will soon open a second store in Paris, one in Milan and a new store in Austin, Texas.
Growth in the DTC channel propelled the brand’s gross profit margin to nearly 60%. DTC net sales increased by 39% to 190.5 million Swiss francs, while wholesale net sales grew 12.2% to 317.7 million Swiss francs.
“We are thrilled to have exceeded our expectations and surpassed the half-billion net sales mark in a single quarter,” co-CEO and CFO Martin Hoffmann said in a statement.
“The majority of growth has again come from the strength of our direct-to-consumer channel, resulting in a significant increase of our DTC mix by almost 500 basis points from 32.6% in Q1 '23 to 37.5% in Q1 '24,” Hoffmann added on an earnings call.
Net sales in Europe, Middle East and Africa, Americas and Asia-Pacific increased by 6.1%, 22% and 68.6%, respectively. On is seeing great momentum in Japan and China. The company said its Tokyo store has doubled net sales year over year.
Marc Maurer, co-chief executive officer, said On is focused on building its shoewear franchises — the Cloudmonster, Cloudsurfer and Cloudrunner — as part of its strategic growth plan. Shoes as a category makes up the vast majority of On’s net sales, growing 21% in Q1 to 484.7 million Swiss francs. Apparel and accessories each grew meaningfully, though, by 16.7% and 36.8%, respectively.
“Looking ahead, we're extremely excited for the months to come, filled with groundbreaking innovations, big partnerships, and the opportunity to have a notable impact in Paris this summer,” Hoffmann said in a statement. The executive added on an earnings call that, “many of our athletes have already qualified or been nominated by their respective countries” and said the company expects more than two dozen of its athletes to be represented at the games.
On relies on famous athletes as brand ambassadors, including Hellen Obiri, who just won her second consecutive Boston Marathon. British singer, songwriter, and dancer FKA Twigs was announced last week as On’s newest brand ambassador and first non-sports figure.
Twigs will be the face of On’s upcoming training collection, according to Caspar Coppetti, On’s co-founder and executive co-chairman.
On expects at least 30% growth in net sales on a constant currency basis for the full year 2024, amounting to at least 2.29 billion Swiss francs, according to the press release. The company further expects gross profit margin of around 60% and an adjusted EBITDA margin in the range of 16% to 16.5% for On’s third full year as a public company.
