By Neil J Kanatt
(Reuters) -On Holding raised its annual sales forecast on Tuesday as its focus on brand promotion drove demand for its athletic-focused apparel and footwear, sending its shares up about 14% in premarket trading.
The Swiss company has been capturing market share in the U.S. from rivals, including Adidas and Nike, by targeting younger customers through high-profile collaborations and product innovations.
“We are very clear, we want to be the most premium brand, and as that, will also need to lead with pricing on the premium position,” CEO Martin Hoffmann told Reuters.
The Roger Federer-backed company hiked prices in July by about $10, mainly on lifestyle-focused offerings.
“But now, looking into the rest of the year, we don’t need more pricing,” Hoffman added, even as the company now faces about 40% tariff on goods imported from Vietnam, a key source country for its products.
“The clear momentum in the brand relative to peers, and that the more profitable, more company-controlled DTC (direct-to-consumer) channel is what is driving performance,” William Blair analyst Dylan Carden said in a note.
The company has also been boosting its direct sales by expanding its retail presence through physical stores as well as its website and app to help drive full-priced sales.
On Holding recently launched the new Cloudsurfer Max and Cloudboom Max shoes, and has ongoing partnerships with actress Zendaya and musician FKA Twigs.
The company expects annual net sales of at least CHF 2.91 billion ($3.60 billion), above its previous expectations of at least CHF 2.86 billion.
The company sees annual adjusted earnings before interest, taxes, depreciation, and amortization margin between 17% and 17.5%, compared with its previous forecast of 16.5% to 17.5%.
Sales increased 32% to CHF 749.2 million in the second quarter, exceeding analysts’ average estimate of CHF 705.3 million, according to data compiled by LSEG.
However, On Holding posted an adjusted loss per share of CHF 0.09, due to a weaker dollar. Analysts had expected a profit of CHF 0.21.
($1 = 0.8093 Swiss francs)
(Reporting by Neil J Kanatt in Bengaluru; Editing by Sriraj Kalluvila and Shinjini Ganguli)
