On Holding raises full year outlook, says ‘momentum is very strong’ ahead of the holidays

On Holding’s (ONON) third quarter results topped forecasts and the company raised its full-year outlook with its CEO saying sales momentum is strong heading into the crucial holiday quarter.

“We had an amazing… strong quarter, significantly above expectations…[that] gives us the confidence into Q4,” On Holding CEO and CFO Martin Hoffmann told Yahoo Finance. “We already see the results…in the first days of November, […] the momentum is very strong.”

For fiscal year 2025, On expects net sales to be up at least 34% year-over-year compared a previous forecast for a jump of at least 31%. At its Investor Day in 2023, the company forecasted net sales to be greater than $4.44 billion US dollars by 2026, which implied a 26% annual growth rate. Hoffmann said the company is well ahead of that.

In the third quarter, On reported earnings per share of CHF 0.43, or $0.54, above the CHF 0.27, or $0.34, investors were looking for, according to Bloomberg data. Revenue came in at CHF 794.4 million, or $993 million, above the CHF 767.5 million, or around $960 million, that the Street was looking for.

On also said it expects its margins to come in above previous forecasts.

In the third quarter, revenue growth was led by the Asia-Pacific region, where sales more than doubled in the quarter when adjusted for currency fluctuations.

Hoffmann said the Asia-Pacific growth was led by a consumer that skews “even younger” and seeks out “premium appeal” that’s different from the mass market.

Meanwhile, he said the US consumer is seeking On for new categories like tennis and training sneakers, adding that it’s expanding the age groups it’s reaching, especially the “younger consumer” with spokespeople like Zendaya, and “filling the space by being the most premium layer in there.” Its Americas sales rose 21% during the quarter.

Coming into the report, On Holding stock has declined along with the broader footwear space, falling some 35%. Rivals Nike (NKE), down 16%, and Deckers Outdoors (DECK), down 59%, have also seen shares fall this year.

Citi analyst Paul Lejuez said ahead of the report the stock’s decline can be in part attributed to “fears of a resurgent Nike and what that means for On’s long-term growth trajectory.”

Lejuez believes Nike’s turnaround will take as long as 12-18 months to show improvement.

Hoffmann isn’t too worried about competition, either.

“We are really charting our own way …[with] the vision to become the most premium global sportswear brand,” he said.

Ahead of the results, Telsey Advisory Group’s Cristina Fernández wrote in a note to clients, “we continue to view the brand as strong with very good traffic to On stores during our visits and low promotional activity across the marketplace.” Hoffmann said its full price share is up year-over-year, and here to stay,

“We are one of the only brands that …does only full price, and the momentum and the growth that we have seen was absolutely amazing,” he said

Innovation, like the Cloudsurfer and Cloudsurfer Max, is what keeps customers willing to pay for the price tag, even after raising prices due to tariffs back in July.

Next year, it plans to introduce new sneakers like an updated Cloud Runner and Cloud Monster, as well as bring its robotically-made LightSpray sneakers to mass markets.

The company is also in the process of searching for a new CFO; Hoffmann assumed the role of sole CEO after co-CEO Marc Maurer departed earlier this year.

Brooke DiPalma is a reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at bdipalma@yahoofinance.com

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