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On Delivers Despite Warehouse Constraints

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Third quarter North American revenues for the Swiss brand On rose by 57 percent to 176.3 million Swiss Francs ($184.6 million) despite temporary constraints on its business in mid-August due to problems in its warehouse that prevented the company from fulfilling all demand, particularly in the Direct-To-Consumer channel. Although the issue has since been rectified, On intends to open a new, automated distribution center in Atlanta to replace its existing facility there by 2025. Also, following recent store openings in China and the Los Angeles market, On is preparing for store openings in Miami and London early next year.

Meanwhile, the group is now forecasting 55 percent revenue growth in FY22 to 1.125 billion Swiss Francs ($1.18 billion) despite ongoing margin pressure from the combination of a strong U.S. dollar and weak Euro. The Zurich company’s annual adjusted Ebitda margin rate remains at 13.2 percent.

In Q3, On’s operating earnings rose 70 percent to the equivalent of $42.6 million as net income rose 59 percent in reported currency to the equivalent of $21.6 million for the period ended Sept. 30. Total quarterly sales rose 50 percent year-over-year to the equivalent of $343.5 million as wholesale revenues jumped 56 percent to $231.8 million and increased nearly 41 percent in the Direct-To-Consumer channel to the equivalent of $111.6 million. Footwear sales were 51 percent higher at $325.6 million; apparel revenues increased by 32 percent in reported currency to $15.9 million and accessory sales came in at $2.0 million.

On senior executives say the company remains committed to a circular future. To that end, the brand’s new Clear Cloud model, in development for five years, is the first athletic shoe with a midsole made from carbon emissions.

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Nov 23, 2022

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