By Ananya Mariam Rajesh
(Reuters) - On Holding raised its annual sales forecast on Tuesday, after beating expectations for the first quarter, as the sportswear maker's focus on selling premium-priced products and bringing in newer items helped attract customers.
WHY IT'S IMPORTANT
Major sportswear companies have been grappling with dwindling sales after wholesalers in the U.S. and Europe started to cut back on inventory as higher costs of living limited customer spending on pricey footwear and apparel.
But wholesale retailers have opened up shelf spaces for upstart brands such as On and Deckers Outdoor (NYSE:DECK)'s Hoka, which have emerged successful and been able to pull in customers through innovative product lines at a time when name brands like Nike (NYSE:NKE) and Adidas (OTC:ADDYY) are taking a hit.
CONTEXT
On has launched several products such as Cloudmonster 2, Cloudspark and Cloudsurfer Trail this year in the running and performance shoe category and is expanding into training and tennis footwear segments.
The company aims to open more directly owned stores as demand remains strong even at elevated price levels compared to bigger brands.
KEY QUOTES
"(United States) still very positive is what we see in the sellouts both on our channel as well as with the key account partners," said Martin Hoffmann, co-CEO and CFO, On Holding.
William Blair analyst Dylan Carden said, "This is a healthy print across all facets and segments of the business ... with a cleaner inventory position and growth continuing to favor the DTC channel, On continues to be in better control of its own fate."
MARKET REACTION
U.S.-listed shares of Roger Federer-backed On Holding were up 10% in premarket trading.
BY THE NUMBERS
On expects full-year 2024 reported net sales of at least CHF 2.29 billion ($2.52 billion), versus CHF 2.25 billion forecast earlier.
First-quarter sales rose 20.9% to CHF 508.2 million, compared with LSEG estimates of CHF 497.4 million.
Quarterly adjusted profit per share of CHF 0.33 also beat estimates of CHF 0.14.
($1 = 0.9073 Swiss francs)