On Holding AG (ONON) Q1 2026 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call summary reveals strong financial performance with significant growth in net sales across regions and categories. The Q&A section confirms management's optimistic outlook, with emphasis on premium brand strategy and innovation. Despite uncertainties, the company's growth trajectory and commitment to maintaining strong margins and brand awareness are evident. The lack of unclear responses and the focus on strategic expansion suggest a positive sentiment, likely resulting in a stock price increase of 2% to 8% over the next two weeks.

Key Financial Performance

Net Sales Net sales exceeded CHF 830 million, growing 26.4% at constant currency year-over-year. This growth was attributed to broad-based demand across regions, categories, and channels.

Gross Profit Margin Gross profit margin reached 64.2%, up from 59.9% in the prior year period, an increase of more than 4 percentage points. This improvement was driven by ASP strength, operational excellence, and economies of scale.

Adjusted EBITDA Margin Adjusted EBITDA margin was 21%, up 450 basis points year-over-year. This increase reflects the premium strategy, operational efficiencies, and strong gross profit margin.

Direct-to-Consumer (D2C) Net Sales D2C net sales reached CHF 322.3 million, growing 28.7% year-over-year at constant currency. Growth was driven by strong brand momentum, increased digital and physical traffic, and new store openings.

Wholesale Net Sales Wholesale net sales exceeded CHF 0.5 billion, growing 25.1% at constant currency year-over-year. Growth was supported by strong momentum with global key accounts and controlled expansion.

Americas Net Sales Net sales in the Americas reached CHF 450.7 million, growing 17.1% at constant currency year-over-year. Growth was driven by increased awareness and premium execution.

EMEA Net Sales Net sales in EMEA reached CHF 207.1 million, growing 25.6% at constant currency year-over-year. Growth was broad-based across countries, with strong performance in the U.K. and Germany.

APAC Net Sales Net sales in APAC reached CHF 174 million, growing 61.4% at constant currency year-over-year. Growth was driven by strong performance in Greater China and South Korea.

Shoe Net Sales Net sales from shoes reached CHF 763.7 million, growing 24% at constant currency year-over-year. Growth was driven by blockbuster franchises and new product launches.

Apparel Net Sales Net sales from apparel reached CHF 55.3 million, growing 57.5% at constant currency year-over-year. Growth was driven by strong D2C performance and increased cross-category purchase rates.

Capital Expenditures Capital expenditures were CHF 23.6 million, representing 2.8% of net sales, up from 1.7% in the prior year. This increase was due to investments in store expansion and retail infrastructure.

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Operating Highlights

LightSpray Technology: Expanded production capacity 30-fold with a new factory in Busan, South Korea. LightSpray Cloudmonster Hyper sold out quickly, representing 20% of footwear net sales in the Boston store's opening week.

SURREAL Superfoam: New innovation offering 60%-70% more energy return than standard EVA. Launching with Cloudsurfer 3 in October 2026.

Cloudtilt and Cloudtilt Remix: Exceptional growth in all regions, becoming the #1 style in Foot Locker, Europe in March.

Geographic Expansion: Strong growth in Asia Pacific (61.4% constant currency growth), with South Korea tripling sales year-over-year. Opened new stores in Seoul, Shenzhen, and London.

Retail Expansion: New stores planned in Stockholm, Sydney, San Francisco, and Sao Paulo. Existing stores in Miami, Milan, and Tokyo showing meaningful same-store growth.

Gross Profit Margin: Achieved a record 64.2% in Q1 2026, up from 59.9% in the prior year.

Direct-to-Consumer (DTC) Growth: DTC net sales grew 28.7% year-on-year at constant currency, contributing 42% of total sales.

Premium Positioning: Maintained commitment to full-price strategy and premium brand perception, with average selling price increasing from USD 145 to over USD 170.

Youth Engagement: Significant increase in 18-24-year-old customer base, driven by partnerships and targeted campaigns like Zendaya's co-created apparel range.

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Risk or Challenges

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Guidance & Outlook

Net Sales Growth: The company expects constant currency net sales growth of at least 23% for the year, translating to reported net sales of CHF 3.51 billion based on current spot rates.

Gross Profit Margin: The company anticipates a full-year gross profit margin of at least 64.5%, significantly ahead of 2025, despite additional tariff impacts.

Adjusted EBITDA Margin: The company projects an adjusted EBITDA margin in the range of 19.5% to 20%, which is higher than prior guidance.

Product Innovation: The company plans to launch SURREAL Superfoam innovation with Cloudsurfer 3 in October and expand LightSpray technology into broader consumer bases and collaborations, including with Loewe.

Retail Expansion: Upcoming store openings are planned in San Francisco, Stockholm, and Sao Paulo, focusing on premium locations and enhancing brand presence.

Apparel Growth: The company is accelerating innovation in apparel, including expanding SenseTec into studio and training collections and introducing Formtech fabric innovation for fall/winter.

Regional Growth: D2C, APAC, and apparel segments are expected to outperform, with strong order books in run specialty channels up over 25% year-over-year.

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Shareholder Return Plan

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Key Q&A

Q:Can you share more about the division of responsibilities between Caspar and David going forward, and the initiatives they've worked on in their prior roles?

A:Caspar emphasized continuity in management, stating that he and David have worked closely for 13 years. They will continue their division of labor on strategic levels, such as retail expansion, apparel, and LightSpray. Operationally, the CFO and COO will report to both of them, and they will assist in executing the strategy.

Q:How should we think about demand in the U.S. business quarter-to-date, given recent geopolitical developments?

A:Caspar expressed optimism about the U.S. market, noting strong performance and increased awareness crossing the 30% threshold. The company is reaching new audiences, including younger and more female demographics. Growth pillars include retail partnerships, apparel, and lifestyle products. David added that D2C growth is strong, with a 28.7% increase, and the brand is attracting apparel-first consumers.

Q:Is the company still committed to being premium despite the management change?

A:Caspar reaffirmed the commitment to building a premium, innovative, and sustainable brand, prioritizing desirability and profitability over sheer size. David added that the brand has multiple growth trajectories, including apparel, global expansion, and lifestyle, which can be pursued in a premium way.

Q:Can you share more about the vision for the 2030 roadmap?

A:Caspar highlighted continuity and the company's strong growth and profitability drivers. He mentioned new growth drivers like apparel and retail and invited stakeholders to an event in Zurich to unveil the 2030 vision and plan, which will include surprises to demonstrate the brand's long-term growth potential.

Q:How should we think about marketing expenses and efficiencies across the business?

A:Martin stated that marketing expenses for the year are expected to be between 13% and 13.5% of revenue, driven by increased brand awareness and strong gross profit margins. Caspar added that efficiencies are being unlocked through scale and AI-driven innovation, which enhances speed and product quality.

Q:What factors are shaping the cadence of growth through the year, and why did gross margin outperform expectations this quarter?

A:Martin explained that D2C growth will remain strong, while wholesale growth will slow to maintain clean inventory levels. Caspar detailed gross margin drivers, including supply-side measures (250 basis points), full-price sales (150 basis points), FX tailwinds (100 basis points), and tariffs (100 basis points). The company plans to reinvest in product innovation and desirability.

Q:Do you see upside to the 23% constant currency sales guidance for the year?

A:Martin stated that 23% is the right aspiration, considering the quality of growth and macroeconomic uncertainties. While there is potential to accelerate growth, the focus remains on maintaining full-price discipline and strong margins.

Q:Review of Unclear Management Responses

A:No questions were identified where management avoided giving a direct answer or lacked clarity.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

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The earnings call highlights strong financial performance, with raised guidance and impressive growth in key segments like apparel and accessories. The Q&A session revealed optimism about future growth, particularly in North America and Asia Pacific, and strong D2C performance. The company is well-positioned with a robust product pipeline and strategic focus on premium brand positioning. Despite some unclear responses, the overall sentiment is positive, suggesting a stock price increase.

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The company's earnings call reveals robust financial performance, with strong growth across regions and product lines, particularly in APAC and apparel. Positive guidance revisions and strategic investments in marketing and innovation bolster future prospects. Analysts seem satisfied with management's responses, indicating confidence. The improved gross margin and increased sales forecasts, along with a focus on premium positioning, suggest a strong positive sentiment. Despite the absence of market cap data, the comprehensive positive outlook and strategic direction suggest a strong positive stock price movement.

ONON Report

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