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Swiss running brand On has raised its profit and sales forecasts for the year after announcing quarterly results that beat expectations. Second-quarter sales climbed 66.6%, driven by strong wholesale growth of 70.1% and DTC growth of 60.8%, as well as continued exceptional momentum and demand in the region On North America, up 102.5%.

Other highlights of the quarter include:

  • On record Q2 2022 net sales of CHF 291.7 million, net profit of CHF 49.1 million and adjusted EBITDA of CHF 31.4 million despite the continued challenging supply chain environment as well as geopolitical and macroeconomic uncertainties.
  • Delivered gross profit margin of 55.1% in Q2 2022, up from 60.7% in the prior year period and up from 51.8% in Q1 2022, reflecting headwinds continued but reduced transients from the higher share of airfreight and related expenses.
  • Macroeconomic developments and the potential impacts of the current environment on consumer demand are closely watched. However, based on a very successful first half and continued strong demand for On’s products, On is raising its previous guidance and now expects net sales of at least CHF 1.1 billion. and an adjusted EBITDA of CHF 145 million for the full year. 2022. Full-year adjusted EBITDA margin guidance remains unchanged at 13.2%.
  • We continue to focus on innovation that will drive the performance of the world’s best athletes. The second quarter not only saw On’s first win in the Diamond League, but also On’s first medals at the Commonwealth Games and World Championships. In addition, On is making great strides in its sustainability mission, having delivered the first fully recyclable running shoe by subscription to the first subscribers of On’s Cyclon program..

Martin Hoffmann, Co-CEO and CFO of On, said: “We are very pleased and proud to announce that we achieved our highest ever quarterly net sales in the second quarter of 2022 and are thus seeing continued strong demand for Sur products from all regions. Our team has done an outstanding job of efficiently managing product flow in what we anticipate will be the near final stages of supply shortages resulting from last year’s plant closures. Thanks to them, we were able to welcome many new fans into the On community and equip them with our latest product launches. In June, for the first time in our history, monthly net sales exceeded 100 million Swiss francs, bringing our total net sales for the first half of 2022 to more than 500 million Swiss francs. Based on the performance we saw in the first half, we are again raising our full-year 2022 net revenue and adjusted EBITDA outlook. As we continue our mission to ignite the he human spirit through movement, we think long-term and our goal is to build a sustainable business at the intersection of performance, design and impact.

Caspar Coppetti, Co-Founder and Co-Executive Chairman of On, said, “We continue to make great strides and reach new milestones at the intersection of performance, design and impact. We are delighted to see that our commitment to developing high performance products to unlock the full potential of our athletes is paying off. Over the past few weeks, On athletes have shown incredible performances, leading not only to our first Diamond League win, but also to our first Commonwealth Games and World Championship medals. This quarter also saw us achieve significant milestones in our mission to drive sustainable and circular innovations. Just a few weeks ago, our very first community of Cyclon subscribers in the United States received their first subscription-based, fully recyclable shoe called Cloudneo. This very special launch was another step towards our sustainability mission and we look forward to sharing many more innovations in the future.

Financial and operational indicators for the second quarter of 2022

Key highlights for the three-month period ended June 30, 2022 compared to the three-month period ended June 30, 2021 include:

  • net sales increased by 66.6% to CHF 291.7 million;
  • net sales via the direct-to-consumer (“DTC”) channel increased by 60.8% to CHF 105.6 million;
  • net sales via the wholesale channel increased by 70.1 percent to CHF 186.0 million;
  • net sales in North America, Europe and Asia-Pacific increased by 102.5% to CHF 181.7 million, by 17.5% to CHF 83.3 million and by 52.2% to 17 CHF.9 million, respectively;
  • net sales of shoes, clothing and accessories increased by 68.2% to 280.6 million francs, by 31.3% to 9.2 million and by 51.9% to 1.8 million;
  • gross profit increased by 51.2% to CHF 160.8 million;
  • the gross margin went from 60.7% to 55.1%;
  • net profit increased to CHF 49.1 million from CHF 14.2 million;
  • net profit margin increased from 8.1% to 16.9%;
  • Class A base EPS (CHF) increased from CHF 0.11 to CHF 0.16;
  • EPS diluted Class A (CHF) increased from CHF 0.10 to CHF 0.15;
  • adjusted EBITDA increased by 14.7% to CHF 31.4 million from CHF 27.4 million;
  • adjusted EBITDA margin decreased from 15.7% to 10.8%;
  • adjusted net profit increased to CHF 44.8 million from CHF 14.0 million;
  • Adjusted base EPS Class A (CHF) increased from CHF 0.09 to CHF 0.14; and
  • Class A Adjusted Diluted EPS (CHF) increased from CHF 0.09 to CHF 0.14.

Key highlights for the six-month period ended June 30, 2022 compared to the six-month period ended June 30, 2021 include:

  • net sales increased by 67.2% to CHF 527.3 million;
  • net sales through the DTC sales channel increased by 63.9% to CHF 189.1 million;
  • net sales via the wholesale channel increased by 69.1 percent to 338.3 million francs;
  • net sales in North America, Europe and Asia Pacific increased by 95.3% to CHF 320.1 million, 23.7% to CHF 158.2 million and 80.4% to CHF 320.1 million, respectively. CHF 34.4 million;
  • net sales of shoes, clothing and accessories increased by 68.5% to CHF 503.1 million, by 38.5% to CHF 20.6 million and by 76.8% to CHF 3.7 million
  • gross profit increased by 51.1 percent to CHF 282.9 million;
  • gross margin decreased to 53.6% from 59.3%;
  • net profit increased to CHF 63.5 million from CHF 3.8 million;
  • net profit margin increased from 1.2% to 12.0%
  • Class A base EPS (CHF) increased from CHF 0.19 to CHF 0.20;
  • EPS diluted Class A (CHF) increased from CHF 0.19 to CHF 0.20;
  • adjusted EBITDA decreased by 0.4% from CHF 47.3 million to CHF 47.1 million;
  • adjusted EBITDA margin decreased from 10.8% to 8.9%;
  • adjusted net profit increased from CHF 26.4 million to CHF 61.8 million;
  • Class A Adjusted Core EPS (CHF) increased by 106.0% to CHF 0.20; and
  • Class A Adjusted Diluted EPS (CHF) increased by 107.5% to CHF 0.19.

Key highlights as of June 30, 2022 include:

  • cash decreased by 14.6% to 557.7 million francs compared to December 31, 2021; and
  • Net working capital was CHF 330.8 million as of June 30, 2022, representing an increase of 76.4% compared to December 31, 2021.

Outlook

It said: “After a very successful first half with net sales exceeding 500 million Swiss francs, we remain confident in our ability to execute our growth strategy in the second half of 2022 despite the uncertainties and continuing macroeconomic challenges.

“We currently anticipate limited impacts from these macroeconomic uncertainties on demand for our products. Nonetheless, we see it as our duty to remain cautious and alert in such an environment and have taken some steps to increase our cost base somewhat more conservatively than initially expected.

“The first half of 2022 had been further impacted by transient supply shortages following factory closures in 2021. Thanks to the dedication and commitment of our factory partners, our stock situation has meanwhile improved. considerably improved. Thus, the use of air freight should be reduced in the second half of the year. We will continue to selectively use air freight to ensure availability of our more recently launched products, which did not have an initial stock position. From there, we expect a limited headwind to our gross profit margin of 150 to 200 basis points in Q3 2022.

“Given the current macroeconomic challenges as well as the very successful first half of 2022, we are increasing our outlook for net sales and adjusted EBITDA. For the year ended December 31, 2022, we now expect net sales to reach 1.1 billion Swiss francs, representing 52% year-over-year growth compared to 2021. The increase in expected net sales will enable additional growth-oriented investments in the brand while increasing our adjusted EBITDA target for the full year at CHF 145 million, confirming our objective of an adjusted EBITDA margin of 13.2% even with a significantly high sales outlook. under IFRS, we only provide guidance on a non-IFRS basis The Company does not provide a reconciliation between forward-looking Adjusted EBITDA and IFRS net income due to the inherent difficulty in predicting and quantifying certain amounts necessary for such a reconciliation. Accordingly, we are unable to predict with reasonable certainty all of the deductions necessary to provide a reconciliation to net income. »

Previously, On said it expected net sales to exceed CHF 1.04 billion, representing year-on-year growth of at least 44% from 2021. Full-year Adjusted EBITDA target of CHF 137 million and corresponding Adjusted EBITDA. margin at 13.2%.