Swiss sports brand On(On Running) announced key financial data for the first quarter of fiscal year 2023: Supported by a normalized operating environment and continued brand momentum, net sales surged by 78.3% year-on-year to a record CHF 420.2 million, exceeding expectations.
At the same time, profitability has also increased significantly, with net profit and adjusted EBITDA increasing by more than 200%, reaching 44.4 million Swiss francs and 61 million Swiss francs, respectively.
On Co-CEO and CFO Martin Hoffmann said, "Our record first quarter net sales are further evidence of On's strong momentum across all geographies, channels, and product portfolios. Compared to the first quarter of 2022, gross margins also improved significantly, thanks to a largely normalized supply chain environment. We have been emphasizing the importance of our multi-channel strategy, and we are pleased to see a strong contribution from new retail stores and self-operated stores, supported by a strong start to new stores in London. Our retail sales more than quadrupled year-over-year."
After the release of the financial report, as of the close on May 16, On's stock price fell by nearly 10%, but since the beginning of this year, the company's stock price has risen by nearly 76%, and its current market value is about 9.6 billion US dollars.
In the first quarter, On continued to occupy an important market share in the high-performance sports market and seize users' minds. Outstanding performances by On's athletes have significantly contributed to this: These include Hellen Obiri's win at the Boston Marathon and Iga Świątek winning her first tennis tournament at the Stuttgart Tennis Open as part of the On membership. The success of On's contracted athletes at the highest level continues to increase the visibility and credibility of the On brand, driving significant growth in the brand's global market share.
As of March 31, 2023, On's gross profit margin in the first quarter of 2023 increased to 58.3% from 51.8% in the same period last year, mainly due to the normalization of the supply chain environment. Profitability was under pressure due to air cargo disruptions in the first quarter of last year.
Higher gross profit margins and economies of scale have reduced the proportion of administrative expenses (SG&A), which has allowed On's profitability to continue to expand.
Net profit and adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) have increased significantly, reaching 44.4 million and 61 million Swiss francs, respectively.
On the basis of strong order growth in the second half of the year, driven by innovative products, the company is confident about 2023.
As previously mentioned, supply chain normalization in recent months has accelerated product availability, and On is currently optimizing existing products to accommodate updated lead-time metrics. On the basis of maintaining higher net sales, On expects inventory levels at the end of 2023 to be roughly in line with December 2022 levels.
David Allemann, Co-Founder and Executive Co-Chairman of On, concludes "We enter 2023 with high ambitions and are pleased to see the continuation of our growth journey and improved profitability in the first quarter of this year. With Hellen Obiri winning the Boston Marathon, we proved once again that our high-performance products are among the best on the market for long-distance running. At the same time, this has also increased the visibility and influence of our products among everyday runners, and we recently began preparations for the 2024 Paris Olympics, but there are still a lot of exciting things to do in 2023."