(Bloomberg) – On Holding Ag shares fired after the Swiss tennis manufacturer raised their sales and profit forecasts, after a secondly strong quarter, in which buyers in Europe and Asia went shopping for their expensive shoes.
The company supported by Roger Federer now provides for revenue growth of at least 31% in this fiscal year, above analysts estimates and three percentage points higher than the previous goal. This translates into net sales of 2.91 billion Swiss francs (US $ 3.6 billion) to current exchange rates, On Tuesday.
Headquartered in Zurich, ON has become one of the biggest highlights in the tennis world, expanding from its main focus on running tennis to other areas such as court tennis, training and clothing. The brand has grown rapidly since its foundation in 2010, gaining market share of larger competitors, including Nike Inc. and Puma SE.
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The company’s shares rose up to 14% in the first negotiations in New York. It was the largest discharge since April 9, a period of volatility in the market, when investors reacted to US commercial tariffs that weighed on the tennis sector.
The ON expects its gross profit margin to reach between 60.5% and 61% in the year, slightly above the previous goal. The company cited better growth than expected on its growing chain of own stores and its e -commerce channels.
“Energy is very high everywhere,” said CEO Martin Hoffmann in an interview. “We are in a really strong position and the whole ecosystem supports our aspirations.”
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More stores
On expects five to ten stores this year, including one in its hometown, Zurich, another in Palo Alto, California, and some South Korea locations, Hoffmann said.
Second quarter sales rose more than expected by analysts, reaching 749 million Swiss francs, an increase of 38% in terms of constant currency over the previous year. The gross profit margin reached 61.5%, also above analysts estimates.
Still, the on unexpectedly recorded a loss of 40.9 million Swiss francs in the second quarter, due to currency fluctuations caused by the devaluation of the dollar.
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On average on average, industry’s most expensive running sneakers and began to increase US prices last month, especially in lifestyle products.
This strategy has not removed consumers so far, with strong initial demand for the new highly padded model Cloudsurfer Max, launched in July, according to Hoffmann.
The increase in on sales, margin and perspectives “shows that robust demand and continuous innovations are boosting a strong price at full price,” said Bloomberg Intelligence analyst Abigail Gilmartin in a statement.
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Revenue in the second quarter jumped 43% in Europe, the Middle East and Africa, and 101% in the Asia-Pacific region, significantly surpassing estimates. The growth of about 17% in the Americas was slightly below expectations, although Hoffmann said that demand in the US remained “exceptionally strong.”
The new ON in Singapore has generated some of the best opening weekend results the company has ever seen anywhere in the world, Hoffmann said.
“The demand there is so strong,” he commented on the Asia Pacific region. “Much stronger than we are willing to provide the market.”
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