On raises its margin outlook after US tariff refunds
Swiss sportswear maker On increased quarterly sales by 17.2 per cent and raised its annual gross margin forecast. US tariff refunds of 52.6 million Swiss francs lifted reported profitability. Direct sales to consumers grew faster than wholesale revenue. The company retained its annual sales growth outlook and disclosed separate margin forecasts including and excluding the refunds.
Economics & Markets··Evening
Refunds widen the gap between margin measures
Swiss sportswear company On raised its annual gross margin forecast after booking US tariff refunds in the third quarter. It now expects a margin of approximately 67.5 per cent including refunds and approximately 66 per cent excluding them. The latter forecast was previously at least 65 per cent. On disclosed the change with results for the period ended 30 September.[1], [2]
The refunds totaled 52.6 million Swiss francs. Quarterly gross profit increased from 522.2 million Swiss francs to 676 million Swiss francs, taking the gross margin from 65.7 per cent to 72.6 per cent. Excluding the refunds, the quarterly gross margin was 66.9 per cent. Net income grew 36.9 per cent to 162.8 million Swiss francs, with a net income margin of 17.5 per cent.[1]
Direct sales outpace wholesale growth
On’s quarterly sales reached 931.4 million Swiss francs, up 17.2 per cent from a year earlier and 17.8 per cent at constant exchange rates. Direct-to-consumer sales increased 25 per cent to 393.3 million Swiss francs and accounted for 42.2 per cent of total sales. Wholesale revenue grew 12.2 per cent to 538.2 million Swiss francs.[1]
For On Holding, sales in Europe, the Middle East and Africa grew 17.9 per cent to 251.4 million Swiss francs. Sales in the Americas reached 490.1 million Swiss francs, up 12.4 per cent. Asia-Pacific sales rose 31.1 per cent to 189.9 million Swiss francs.[1]
Annual sales growth outlook stays in place
Adjusted earnings before interest, taxes, depreciation and amortization were 256.8 million Swiss francs in the quarter. Their margin was 27.6 per cent including refunds and 21.9 per cent excluding them. For the full year, On forecasts that margin at 21–21.5 per cent including refunds, while retaining its 19.5–20 per cent outlook excluding them.[1]
Management also maintained its annual constant-currency sales growth outlook in the low twenties per cent. Over the first nine months, sales totaled 2,613.6 million Swiss francs and net income reached 371 million Swiss francs. Period-end cash and cash equivalents were 1,339 million Swiss francs.[1]
