Shares of On Holding (ONON) saw a slight decline on Tuesday, despite a strong performance in the third quarter. The co-CEO of the running-shoe maker reassured investors that the company remains on track to achieve its long-term objectives while steadily gaining market share.
Impressive Third Quarter Results
In the third quarter, On reported earnings of 0.20 Swiss francs or 22 cents per share. This represents substantial growth compared to 7 cents per share in the same period last year and surpasses analysts' expectations of 16 cents per share. Moreover, sales experienced a remarkable increase of 46.5% to reach $532.4 million, exceeding the consensus estimate of $502.3 million.
Enhanced Full-Year Outlook
On raised its revenue guidance for the full year and now anticipates earnings of approximately $2 billion, slightly surpassing the average analyst estimate. This upward revision demonstrates the company's confidence in its ability to continue performing well.
Despite the positive news, On's stock experienced a decline of just over 2.6% during morning trading, currently priced at $25.87 per share. Since receiving significant attention in September, the stock has decreased by around 9%.
Fourth Quarter Forecast
The market's reaction may be attributed to the fourth-quarter forecast. While On raised its outlook for 2023, it didn't meet expectations by a wide margin. As a result, analysts speculate that the fourth quarter, which encompasses the holiday season, might fall short of projections. The company's new guidance suggests a 21% increase in revenue for the final quarter, compared to a consensus that initially predicted over a 25% rise.
Managing Investor Expectations
Co-CEO Marc Maurer emphasized that investors shouldn't have been caught off guard by the implied outlook for the fourth quarter. He assured stakeholders that On has been transparent in its communications. Maurer explained that, despite a strong October, the company has experienced slightly reduced momentum at a macro level leading up to the holiday season.
Overall, On Holding remains optimistic about its future prospects and its ability to achieve long-term goals. While there may be short-term fluctuations in stock performance, the company's consistent growth and dedication to gaining market share position it favorably within the industry.
On Continues to Thrive in a Challenging Environment
Despite facing a difficult business climate, On has managed to maintain steady growth and increase its market share while maintaining full pricing. This approach has been met with success, reinforcing On's commitment to long-term sustainability.
Impressive Third-Quarter Performance
On's third-quarter results have been nothing short of remarkable, reflecting the company's focus on profitability. With a gross margin approaching 60%, this quarter has been the most profitable for On so far. Notably, On's sporting ambassadors have achieved significant victories, further solidifying the brand's reputation. Additionally, the company's strategic decision to avoid discounting has proven effective.
Emphasizing Product Innovation and Sales Growth
While external factors like currency fluctuations may impact profitability, On remains confident in its ability to control the pace and quality of product innovation. The appeal of On's shoes has contributed to an impressive sales performance, exceeding the company's expectations for the year. This positive momentum is expected to continue into 2024.
Excitement for the Future and Strategic Priorities
Looking forward, On is eager for the summer Olympics in Paris in 2024. The company is actively creating innovative products for its athletes to use during these prestigious games. Furthermore, On's three-year strategy, unveiled in October, will be implemented starting next year. By doubling down on running, opening new stores, launching training products, and pursuing other initiatives, On aims to double its revenue and solidify its position in the market.