Sportswear Brand On Misses Quarterly Sales, Raises Profit Margin Outlook
On's Financial Performance and Market Impact
Quarterly Sales Results and Profit Margin Update
Aug 11 (Reuters) - Sportswear brand On missed Wall Street estimates for second-quarter net sales on Tuesday, signaling pressure from a tougher consumer environment and higher costs from U.S. tariffs.
On executives emphasized they were prioritizing profitability over sales volumes, mindful of the risk of discounting. The company posted net sales of 850.3 million Swiss francs ($1.05 billion) in the quarter ended June 30, missing analysts' estimate of 878.16 million francs.
Profit Margin Outlook
The company also raised its full-year gross profit margin outlook to at least 65%, from its previous expectation of 64.5%.
Market Position and Competitive Landscape
Brand Growth and Market Share
On, founded in 2010 and known for its sneakers' distinctive hollow soles, has rapidly muscled into a sportswear market previously dominated by Nike and Adidas, eating into both brands' market share.
Competitor Performance
Adidas' shares dropped about 12% after the company missed quarterly profit estimates last month.
Sales Outlook and Regional Performance
Full-Year Sales Forecast
On also expects full-year net sales to be in the range of 3.47 billion Swiss francs to 3.56 billion francs on a constant currency basis, widening its previous outlook of about 3.51 billion francs.
Regional Sales Breakdown
Americas Market
Sales growth in On's core Americas market, which accounts for more than half of its revenue, slowed to 13% for the quarter in currency-adjusted terms, down from a 17% increase in the March quarter.
Asia-Pacific Market
On continued to post strong growth outside its core market, with Asia-Pacific sales rising 54.7% on a constant-currency basis.
($1 = 0.8110 Swiss francs)
(Reporting by Angela Christy in Bengaluru; Editing by Janane Venkatraman)
