Sales of the fledgling footwear brand backed by tennis legend Roger Federer are booming in the U.S. The only question is how customers will pay.
Performance shoe brand On told analysts this week that the dollar’s weakness against the Swiss franc was holding back its stunning results.
The Zurich-based company has seen rapid growth so far this year, reporting sales soaring more than 50% in the April-June quarter compared with the same period in 2022.
Ann expects the momentum to see sales rise to at least CHF 1.76 billion 2023 ($2 billion), higher than forecast in May.
However, despite the optimism, one of the factors preventing the company from further improving its full-year outlook was the negative impact of foreign exchange, with the U.S. dollar weighing on its results.
“Over the past month, we have seen continued strength in the Swiss franc against almost every other currency in the world,” On chief financial officer and co-CEO Martin Hoffman said on the sidelines of a company conference. Tuesday’s earnings conference call.
The implication, Hoffman noted, is that the brand will raise its guidance to 1.78 billion Swiss francs if the dollar stays at par with the Swiss franc.
Instead, a weaker dollar cost the brand “around 20 million Swiss francs” in the second half of the year.
“Just to put things in perspective,” Hoffman continued. “If you talk about 1.76 billion Swiss francs today and convert that into dollars, we’re talking about 2 billion Swiss francs in sales.”
However, Hoffman reasoned: “Given the current FX environment, the strength and momentum of the brand becomes even more apparent.”
The Swiss franc has gained more than 7 percent against the dollar in the last year, while the brand’s success has rapidly picked up in the United States.
The Swiss franc has also gained 0.2% against the euro over the past 12 months. The changes have affected Mr Ahn’s view of the year ahead.
“We do continue to have strong growth aspirations in our guidance, but it’s kind of overshadowed by FX,” Hoffman said. tell bloomberg.
A spokesperson for On told wealth While the exchange rate will affect the company’s reported figures in Swiss francs, it won’t affect On’s U.S. expansion priorities
American Popularity Booms
Currency volatility aside, On is benefiting from U.S. expansion through e-commerce and direct-to-consumer channels.
The brand’s presence at retailers such as Dick’s Sporting Goods and Foot Locker allows it to reach more consumers and compete with existing brands such as Nike and Adidas.
On noted that the company is seeing “very, very strong sales” through some multi-brand retail channels like Dick’s.
As a result, the Swiss company plans to add more stores in the US and EMEA.
“Dick’s has 800 stores, and we’re in just over 50 of them,” Hoffman told Bloomberg. “Therefore, there is huge untapped market potential.”
While foreign currency rates continue to weigh on some of its markets, On expects growth of 44% in the second half of the year due to its positive growth trajectory.
On’s share price has risen more than 50% Since the start of 2023, it has outperformed many of its peers in the sports industry by a wide margin.
What’s so special about On?
On was founded in 2010, after Federer invested an undisclosed sum in the company 2019. What sets the brand’s offerings apart is the “pods” in the shoe that work like cavities, designed to absorb the impact of each step.
The shoe’s popularity among sports enthusiasts has brought profits to On four years its launched.
The company will be listed in August 2021, with a valuation of more than $11 billion The launch comes amid a surge in demand for sports-related goods in the wake of the COVID-19 lockdown.
By 2021, half of Swiss shoemaker’s business comes from the US
Since then, On has continued to expand its product line and presence across markets, not only with the support of a high-profile athlete, but also to differentiate itself by promoting sustainability as part of its business.
The company launched resale site In September, to reduce waste, second-hand items were offered to consumers looking for a reduced price version of On shoes.
“Our journey as a public company is an incredible continuation, with significant progress and great accomplishments,” David Allemann, the company’s co-founder, said in a statement.
Svlook
