On Holding, the Swiss sneaker company, reported strong growth in its first quarter, surpassing Wall Street expectations for both earnings and revenue, despite a shortfall in direct-to-consumer sales. For the quarter ending March 31, On's direct-to-consumer revenue rose 16.4% to 322.3 million Swiss francs (approximately US$414.2 million), although this was below the anticipated 326 million francs.
In contrast, revenue from the wholesale channel grew by 13.3% to 509.6 million francs, exceeding the expected 499 million francs. The company announced an increase in its profitability outlook, projecting a gross profit margin of at least 64.5% by 2026, up from a previous estimate of 63%.
This forecast still accounts for a 20% tariff on imports from Vietnam, despite a recent Supreme Court ruling that lifted this duty, as On is preparing for potential future tariffs. The adjusted EBITDA margin is now expected to be between 19.5% and 20%, an increase from the earlier range of 18.5% to 19%.
On's earnings per share were reported at 37 cents, significantly higher than the expected 27 cents, and total revenue reached 831.9 million francs, a 14.5% increase from the previous year. However, the company's stock has declined nearly 27% year-to-date, as some analysts question its ability to maintain growth.
Co-CEO Caspar Coppetti highlighted the company's successful strategy in China, where sales are growing rapidly, contrasting with Nike's struggles in the region. The company also recently appointed co-founders Coppetti and David Allemann as co-CEOs, succeeding Martin Hoffmann, who stepped down to pursue philanthropic interests.
Coppetti emphasized that the company's strategic direction will remain unchanged under their leadership