On Holding (ONON), the parent company behind Swiss shoemaker On Running, beat earnings and revenue forecasts for Q3 results early Tuesday. ONON stock tumbled.
Footwear stocks broadly performed well in October. Nike was one of the top climbers in the Dow Jones Industrial Average after beating earnings estimates and raising its revenue guidance in September. ONON stock lagged the group, but has rebounded about 3.5% in November after unraveling nearly 8% in October. On Running shares slipped into a downtrend after the company delivered a rare earnings miss for its Q2 results in mid-August and warned sales growth would continue slowing from its torrid pace.
The shoemaker reported earnings of 22 cents per share, improving from 7 cents per share last year, according to FactSet. Revenue leapt nearly 53% to a record $532 million, but sales growth slowed for the third quarter in a row.
FactSet analysts expected earnings of 17 cents per share on $502 million in sales.
“The third quarter has not only been the seventh consecutive record top-line quarter, but also our most successful quarter in history across numerous measures,” Co-CEO and CFO Martin Hoffmann said in the release, noting brand momentum continues to translate into high sales growth across all its channels.
The company plans to add less additional wholesale doors going forward. Instead, it will focus on existing wholesale partners, its own e-commerce, retail and direct-to-consumer channels.
On Running lifted its full-year sales outlook by 30 million Swiss Francs, or $33.25 million, to CHF 1.79 billion, or $1.98 billion. The company reported full-year earnings of $1.32 billion in 2022. On Running expects to reach a gross profit margin of 59% for the year. It maintained its full-year EBITDA margin forecast of 15%.
FactSet guides 70% earnings growth for fiscal 2023 to 51 cents per share on 48.5% revenue growth to $1.96 billion.
Evercore ISI initiated coverage of ONON stock with an outperform rating and $38 price target on Nov. 6. Analyst Michael Binetti expects On Running to deliver a “top-of-peer” growth rate for several years, driven by the company’s combination of low but growing brand awareness and strong early adoption trends among consumers in key global markets.
On Running Takes Top Spot At Women’s NYC Marathon
The shoe brand backed by tennis champion Roger Federer is making waves in the world of running.
Hellen Obiri won the women’s New York City Marathon on Nov. 5 wearing the On CloudTri 1 after winning the Boston Marathon wearing the same shoes in April. Nike (NKE), Under Armour (UA), Adidas, Puma and Hoka by Deckers (DECK) featured prominently among the top 10 runners for the women’s race.
The top two finishers in the men’s New York Marathon wore the Adidas Adizero Adios Pro Evo 1 and Adidas Adizero Adios Pro 3. The third and fourth place finishers wore Nike Vaporfly sneakers.
ONON Stock Performance
On Running stock fell more than 6% early Tuesday, on track for five consecutive days of declines. ONON stock faded 1.3% Monday. Shares are poised to drop further below their 50-day moving average and short-term support at the 21-day line after closing below the moving averages Monday.
ONON stock rallied nearly 55% so far this year through Monday’s close.
You can follow Harrison Miller for more stock news and updates on Twitter @IBD_Harrison
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