On Announces Fourth Quarter and Full Year Results, and the Filing of its Annual Report on Form 20-F for 2023

On Holding AG (NYSE: ONON) (“On,” “On Holding AG,” the “Company,” “we,” “our,” “ours,” or “us”) announced its financial results on 12th March 2024 for the fourth quarter and full year, and that it has filed its annual report on Form 20-F (the “Form 20-F”) for the year ended December 31, 2023, with the U.S. Securities and Exchange Commission (the “SEC”).

  • On achieves strong full year results in 2023, significantly exceeding the expectations set at the beginning of the year, reaching net sales of CHF 1,792.1 million. This reflects a reported growth rate of 46.6% year-over-year and over 55% on a constant currency basis. On further reports a gross profit margin of 59.6%, net income of CHF 79.6 million and an adjusted EBITDA margin of 15.5%, showcasing On’s ongoing commitment to combine strong growth with continuously increasing profitability. 
  • On reports fourth quarter net sales of CHF 447.1 million, growing by 21.9% year-over-year on a reported basis and over 31% on a constant currency basis. The strength and increasing awareness of the On brand drove record-high traffic to On’s website and retail stores around the globe, resulting in a 46.2% DTC share, the highest in On’s history. 
  • Fueled by the elevated DTC share and high share of full-price sales in both channels, On’s gross profit margin in Q4 2023 reached 60.4%, above its stated mid-term ambition to exceed 60%.  
  • The continued strong momentum into 2024, coupled with a pipeline of exciting and highly innovative product launches provides On with confidence to execute on the next step towards its stated mid-term targets. For the full year 2024, On expects to achieve a constant currency net sales growth rate of at least 30%. At current spot rates, the corresponding total expected reported net sales for 2024 is equivalent to at least CHF 2.25 billion. On further expects to achieve a gross profit margin of approximately 60% and an adjusted EBITDA margin in the range of 16.0 – 16.5% for the full year 2024. 
  • Based on the successful execution of its proven multi-channel strategy, On continues to gain market share at unprecedented rates. In 2024, On intends to scale existing and new audiences globally with large brand moments. Staying true to its core in running, On is excited to support its world-class roster of athletes on the road to the 2024 Olympics in Paris. Following Hellen Obiri’s historical marathon wins in 2023, On athletes have kicked off the new year successfully, winning two track medals at the World Indoor Championships.

Martin Hoffmann, Co-CEO and CFO of On, said: “On our journey towards building the most premium global sportswear brand, 2023 was another exceptional year. We achieved an outstanding 55% constant currency net sales growth, while bringing efficiency and profitability to new heights and driving the highest positive cash flow in our history. Our big thank you and admiration goes to our now over 2,400 team members, who are passionately working towards making our vision a reality every day. We enter 2024 with a lot of tailwind and opportunities in all parts of the business. The demand for the On brand remains very strong. Exciting product launches and big brand moments are in the making. We have more capabilities to execute on our strategic plan than ever before – from Retail to Apparel, from Ecom to Operations. And we have a great team in place – ready to Dream On.”

David Allemann, Co-Founder and Executive Co-Chairman of On, said: “We are proud to look back at a year filled with milestones that highlight On’s unique position in the market. Fueled by athlete successes, including Hellen Obiri becoming the first woman in 34 years to win both the Boston and New York City marathons in the same year, we witnessed our running products soar to new heights in 2023. While our portfolio is deeply rooted in our commitment to innovation, catering first to athletes and runners, we recognize the wider opportunities for On in the evolving sports and fashion landscape. As we look to further expand our presence in the global premium sportswear market, we have put a big emphasis on building awareness for our apparel offering. Based on the recent success, new and updated products and supported by our own retail store rollout, we expect to significantly build this category over the next years.” 

Key Financial Highlights

Key highlights for fiscal year 2023 compared to fiscal year 2022 included:  

  • net sales increased 46.6% to CHF 1,792.1 million, or by 55% on a constant currency basis;  
  • net sales through the direct-to-consumer (“DTC”) sales channel increased 50.9% to CHF 671.8 million;  
  • net sales through the wholesale sales channel increased 44.2% to CHF 1,120.3 million;  
  • net sales in Europe, Middle East and Africa (“EMEA”), Americas and Asia-Pacific increased 29.2% to CHF 488.7 million, 52.2% to CHF 1,162.2 and 75.9% to CHF 141.1 million, respectively;  
  • on a constant currency basis, net sales in EMEA, Americas and Asia-Pacific increased 35%, 61% and 96%, respectively;  
  • net sales from shoes, apparel and accessories increased 46.6% to CHF 1,711.4 million, 45.5% to CHF 68.9 million and 60.7% to CHF 11.8 million, respectively; 
  • gross profit increased 55.8% to CHF 1,067.2 million from CHF 684.9 million;  
  • gross profit margin increased to 59.6% from 56.0%;  
  • net income increased 37.9% to CHF 79.6 million from CHF 57.7 million; 
  • basic EPS Class A (CHF) increased to 0.25 from 0.18; 
  • diluted EPS Class A (CHF) increased to 0.25 from 0.18; 
  • adjusted EBITDA increased 67.6% to CHF 276.9 million from CHF 165.3 million; 
  • adjusted EBITDA margin increased to 15.5% from 13.5%; 
  • adjusted net income increased to CHF 112.4 million from CHF 90.6 million; 
  • adjusted basic EPS Class A (CHF) increased to 0.35 from 0.29; and 
  • adjusted diluted EPS Class A (CHF) increased to 0.35 from 0.28. 

Key highlights for the three-month period ended December 31, 2023, compared to the three-month period ended December 31, 2022, included:

  • net sales increased 21.9% to CHF 447.1 million, or by 31% on a constant currency basis;
  • net sales through the DTC sales channel increased 38.2% to CHF 206.6 million;
  • net sales through the wholesale sales channel increased 10.7% to CHF 240.5 million;
  • net sales in EMEA, Americas and Asia-Pacific increased 22.9% to CHF 112.5 million, 18.5% to CHF 300.6 million, 57.7% to CHF 34.0 million, respectively;
  • on a constant currency basis, net sales in EMEA, Americas and Asia-Pacific increased 26%, 29%, 76%, respectively;
  • net sales from shoes, apparel and accessories increased 20.4% to CHF 425.7 million, 60.1% to CHF 18.4 million and 60.1% to CHF 2.9 million, respectively;
  • gross profit increased 25.9% to CHF 270.2 million from CHF 214.6 million;
  • gross profit margin increased to 60.4% from 58.5%;
  • net loss increased 1.3% to CHF 26.8 million from CHF 26.4 million;
  • basic earnings per share (“EPS”) Class A (CHF) remained unchanged at (0.08);
  • diluted EPS Class A (CHF) remained unchanged at (0.08);
  • adjusted EBITDA increased 16.3% to CHF 71.9 million from CHF 61.8 million;
  • adjusted EBITDA margin decreased to 16.1% from 16.8%;
  • adjusted net income/(loss) decreased to CHF (16.3) million from CHF 7.5 million;
  • adjusted basic EPS Class A (CHF) decreased to (0.05) from 0.02; and
  • adjusted diluted EPS Class A (CHF) decreased to (0.05) from 0.02.

Key balance sheet highlights as of December 31, 2023, compared to December 31, 2022, included:

  • cash and cash equivalents increased by 33.3% to CHF 494.6 million from CHF 371.0 million; and
  • net working capital was CHF 496.2 million as of December 31, 2023, which reflects an increase of 8.1% compared to December 31, 2022.

Adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted basic EPS, adjusted diluted EPS, net working capital and measures presented on a constant currency basis are non-IFRS measures used by us to evaluate our performance. Furthermore, we believe adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted basic EPS, adjusted diluted EPS, net working capital and measures presented on a constant currency basis enhance investor understanding of our financial and operating performance from period to period because they enhance the comparability of results between each period, help identify trends in operating results and provide additional insight and transparency on how management evaluates the business. Adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted basic EPS, adjusted diluted EPS, net working capital and measures presented on a constant currency basis should not be considered in isolation or as a substitute for other financial measures calculated and presented in accordance with IFRS. For a detailed description and a reconciliation to the nearest IFRS measure, see the section below titled “Non-IFRS Measures”. 

Outlook 

On continued on its significant growth path in 2023, reaching numerous records and milestones in the past financial year. Based on the visible strong demand for the On brand, a pipeline of exciting and highly innovative products as well as strong momentum into 2024, On expects to continue to grow at unprecedented rates for a sportswear brand at its scale.  

In October 2023, at On’s Investor Day, On introduced the aspiration to achieve a net sales CAGR of 26% through 2026. For the full year 2024, On expects to grow even beyond this rate and to achieve a constant currency net sales growth rate of at least 30%. At current spot rates and reflecting the considerable recent Swiss Franc strength, this implies reported net sales of at least CHF 2.25 billion in 2024. Negative foreign exchange impacts are expected to be more pronounced in the first half of 2024.  

For the first quarter of 2024 specifically, taking into account the lapsing of a strong wholesale quarter in the first quarter of 2023, On expects an increased DTC share and to achieve a constant currency net sales growth rate of 26%. At current spot rates, this implies expected reported net sales in the first quarter 2024 of CHF 495 million. 

In addition to the growth ambitions voiced in October 2023, On further introduced the vision to be the most premium global sportswear brand. This vision comes to life in the form of premium products and a premium customer experience, but also a premium financial profile and level of profitability. For 2024, On anticipates a full year gross profit margin of approximately 60%, in line with the previously announced mid-term target. 

Supported by the strong gross profit margin, On expects to take the next step towards its mid-term target to reach an adjusted EBITDA margin of 18%+. In 2024, On anticipates to achieve a full year adjusted EBITDA margin in the range of 16.0 – 16.5%. 

Other than with respect to IFRS net-sales and gross profit margin, On only provides guidance on a non-IFRS basis. The Company does not provide a reconciliation of forward-looking adjusted EBITDA to IFRS net income due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation. As a result, we are not able to forecast with reasonable certainty all deductions needed in order to provide a reconciliation to net income. The above outlook is based on current market conditions and reflects the Company’s current and preliminary estimates of market and operating conditions and customer demand, which are all subject to change. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of risks and uncertainties, including those stated below and in our filings with the U.S. Securities and Exchange Commission (the “SEC”). 

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