22 Mar On’s Revenues Surge 92 Percent In Fourth Quarter
On Holding AG significantly decreased its loss in the fourth quarter ended December 31 as sales vaulted 91.9 percent. For the current year, the Swiss running brand predicts sales will grow 39 percent.
Martin Hoffmann, Co-CEO and CFO of On said, “After a great year and exceptionally strong fourth quarter well beyond our own expectations, we are heading into 2023 with a lot of momentum and in a position of strength. After navigating through a challenging 2022, including supply shortages, tight production capacities and disruption of global trade lanes, we are looking forward to a great year with largely normalized operations. We have made significant progress in many areas in the 18 months since our IPO, which will set us up for ongoing success and market share gains. The rollout of our new website, the purchase of the on.com domain, our latest owned retail store in London and the next phase of CloudTec, CloudTec Phase, are only a selection of recent drivers that excite us about the opportunities which lie ahead. With the Paris Olympics in 2024 as an important medium-term target, we will continue to invest in both our athlete team as well as pinnacle products at the forefront of innovation.”
David Allemann, co-founder and executive co-chairman of On, said, “We have often spoken about our commitment to drive growth while at the same time driving profitability. Finishing our first full year as a public company with net sales exceeding CHF 1.2 billion and a net income of CHF 57.7 million is a huge testament to the incredible work that our team continues to do every day. We are thrilled to see how our continued innovations are supporting the expansion into new consumer groups and are building our community of fans and incredible athletes. Running will continue to be our focus in 2023, but we are also extremely excited to announce On is increasing its presence on the tennis court too. We are honored that the women’s world number one ranked player, Iga Świątek, and America’s newest men’s sensation, Ben Shelton, are joining the On team on this journey.”
Key Financial Highlights Fiscal Year 2022
(compared to the fiscal year 2021)
- Net sales increased 68.7 percent to CHF 1,222.1 million;
- Net sales through the DTC sales channel increased 61.4 percent to CHF 445.1 million;
- Net sales through the wholesale sales channel increased 73.1 percent to CHF 777.0 million;
- Net sales in North America, Europe, Asia-Pacific and Rest of World increased 80.3 percent to CHF 738.5, 36.1 percent to CHF 354.3 million, 87.7 percent to CHF 80.2 million and 310.5 percent to CHF 49.1 million, respectively;
- Net sales from shoes increased 70.9 percent to CHF 1,167.5 million, net sales from apparel increased 30.2 percent to CHF 47.3 million and net sales from accessories increased 48.3 percent to CHF 7.4 million;
- Gross profit increased 59.2 percent to CHF 684.9 million;
- Gross profit margin decreased to 56.0 percent from 59.4 percent;
- Net income increased to CHF 57.7 million from a net (loss) of CHF (170.2) million;
- Net income / (loss) margin changed to 4.7 percent from (23.5) percent;
- Basic EPS Class A (CHF) increased to 0.18 from (0.59);
- Diluted EPS Class A (CHF) increased to 0.18 from (0.59);
- Adjusted EBITDA increased 71.4 percent to CHF 165.3 million;
- Adjusted EBITDA margin increased to 13.5 percent from 13.3 percent;
- Adjusted net income increased to CHF 90.6 million from CHF 31.1 million;
- Adjusted basic EPS Class A (CHF) increased to 0.29 from 0.11; and
- Adjusted diluted EPS Class A (CHF) increased to 0.28 from 0.11.
Key highlights For The Three-Month Period Ended December 31, 2022
(compared to the three-month period ended December 31, 2021)
- Net sales increased 91.9 percent to CHF 366.8 million;
- Net sales through the direct-to-consumer (“DTC”) sales channel increased 76.4 percent to CHF 149.4 million;
- Net sales through the wholesale sales channel increased 104.3 percent to CHF 217.3 million;
- Net sales in North America, Europe, Asia-Pacific and Rest of World increased 81.5 percent to CHF 242.1 million, 80.6 percent to CHF 79.6 million, 103.8 percent to CHF 21.6 million, and 680.5 percent to CHF 23.4 million, respectively;
- Net sales from shoes, apparel and accessories increased 96.7 percent to CHF 353.4 million, 15.4 percent to CHF 11.5 million and 30.9 percent to CHF 1.8 million;
- Gross profit increased 91.9 percent to CHF 214.6 million;
- Gross margin remained unchanged at 58.5 percent;
- Net (loss) changed to CHF (26.4) million from CHF (187.0) million;
- Net (loss) margin changed to (7.2) percent from (97.8) percent;
- Basic earnings per share (“EPS”) Class A (CHF) increased to (0.60) from (0.08);
- Diluted EPS Class A (CHF) increased to (0.60) from (0.08);
- Adjusted EBITDA increased 451.7 percent to CHF 61.8 million;
- Adjusted EBITDA margin increased to 16.8 percent from 5.9 percent;
- Adjusted net income increased to CHF 7.5 million from CHF (13.8) million;
- Adjusted basic EPS Class A (CHF) increased to 0.02 from (0.04); and
- Adjusted diluted EPS Class A (CHF) increased to 0.02 from (0.04).
Key Balance Sheet Highlights As Of December 31, 2022
(compared to December 31, 2021)
- Cash and cash equivalents decreased 43.2 percent to CHF 371.0 million; and
- Net working capital was CHF 459.2 million which reflected an increase of 144.9 percent.
On finished the 2022 financial year on a high note and with a further record net sales quarter. The exceptional ongoing momentum across all regions, channels and product groups, combined with a normalization of product supply and significantly improved inventory position versus twelve months ago, has set On up to hit the ground running in 2023. Compared to a supply-constrained first quarter of 2022, On expects a net sales growth rate of 61 percent in the first quarter of 2023 versus the prior year period.
In line with On’s mission and strategic focus to build a brand that is set up for the long-term by emphasizing controlled and durable growth, On expects to reach net sales of at least CHF 1.7 billion for the full year 2023. This represents a year-over-year growth rate of 39 percent, which takes into account approximately 300 basis points of the current foreign exchange headwinds and therefore reflects a currency-neutral growth rate of 42 percent.
As a result of the normalized supply chain environment, On currently does not expect exceptional air freight usage in 2023. Together with a strong inflow of recent products, which will enable a continued high share of full price sell-through, On foresees the continuation of the gross profit margin expansion towards the stated mid-term target of 60 percent. Considering current FX rates, On currently anticipates a full-year 2023 gross profit margin of approximately 58.5 percent. Driven by ongoing scale gains in SG&A expenses, somewhat offset by an intended re-acceleration of marketing expenses, On expects its adjusted EBITDA margin for the full year 2023 to increase to 15 percent.