On Holding Ag Class A ((ONON)) has held its Q4 earnings call. Read on for the main highlights of the call.
On Holdings AG’s recent earnings call painted a picture of robust growth and positive sentiment, despite some operational challenges and economic concerns. The company showcased impressive performance across various segments and regions, indicating a strong overall outlook.
Record Net Sales Growth
On Holdings AG reported an impressive constant currency growth rate of over 33%, reaching CHF 2.32 billion in net sales for 2024. This record-breaking achievement underscores the company’s strong market presence and effective sales strategies.
Strong D2C Channel Expansion
The company successfully expanded its direct-to-consumer (D2C) channel, increasing its share by more than 3 percentage points. This expansion contributed to premium margins, with a gross profit margin of 60.6%, highlighting the effectiveness of its D2C strategies.
Apparel Segment Milestone
In a significant milestone, On Holdings AG’s apparel segment achieved over CHF 100 million in net sales, growing 51% in constant currency terms. This growth indicates a strong consumer demand and successful product offerings in the apparel category.
APAC Region Growth
The APAC region demonstrated remarkable growth, with net sales increasing by 117.5% on a reported basis and 124.6% on a constant currency basis. This surge was primarily driven by strong performances in Japan and China, showcasing the company’s expanding footprint in Asia.
Expansion of Retail Footprint
In 2024, On Holdings AG opened 19 new retail stores in iconic locations, enhancing brand visibility and regional awareness. This strategic expansion is expected to further strengthen the company’s market presence.
Positive Cash Flow and Profitability
The company reported a healthy operating cash flow of CHF 510.6 million, with a total cash balance of CHF 924.3 million at the end of the year. This financial strength underscores On Holdings AG’s robust profitability and cash management.
Operational Challenges in Atlanta
On Holdings AG faced operational disruptions at its Atlanta warehouse, impacting distribution efficiency and incurring potential incremental costs during ramp-up. Addressing these challenges is crucial for maintaining operational efficiency.
Apparel Segment Lagging Behind
Despite strong growth, the apparel segment is slightly behind midterm expectations, indicating room for improvement. The company is likely to focus on strategies to enhance performance in this segment.
Macro-Economic Environment Concerns
The company expressed caution regarding the macroeconomic environment, which could potentially impact future growth projections. This cautious stance reflects the broader economic uncertainties affecting global markets.
Forward-Looking Guidance
Looking ahead, On Holdings AG provided a positive outlook for 2025, expecting a constant currency growth rate of at least 27%, translating to CHF 2.94 billion in net sales. The company anticipates a gross profit margin of approximately 60.5% and an adjusted EBITDA margin between 17% and 17.5%. Strategic focuses include expanding its premium brand presence globally, particularly in China, increasing its D2C share, and leveraging partnerships with high-profile talents. Significant investments in operational excellence, including warehouse automation in Atlanta, are planned to support future growth.
In conclusion, On Holdings AG’s earnings call reflected a strong performance with significant growth across multiple segments and regions. While operational challenges and economic concerns were noted, the overall sentiment was positive, with a promising outlook for 2025. The company’s strategic initiatives and financial strength position it well for continued success in the coming years.