On Running’s Extraordinary Expansion Despite Global Trade Obstacles
Robust Sales Growth Amid Rising Tariffs
The Swiss athletic apparel company On Running experienced a striking 32% surge in sales during the second quarter,prompting an upward revision of its full-year revenue forecast. This growth comes despite the introduction of new import tariffs on goods from Vietnam, a key manufacturing hub for many apparel brands. While these tariffs have challenged numerous companies sourcing from Southeast Asia, On Running has successfully sustained its growth trajectory.
Upgraded Financial projections Signal Strong Confidence
On Running now expects annual revenues to reach 2.91 billion Swiss francs ($3.58 billion), surpassing its previous estimate of 2.86 billion francs ($3.52 billion). This revised outlook closely matches Wall Street’s consensus forecast near 2.92 billion francs ($3.59 billion). Moreover, the company raised its anticipated gross margin range to between 60.5% and 61%, improving upon the earlier projection of 60% to 60.5%, reflecting enhanced operational efficiency.
Strategic Price Adjustments Offset Increased Costs
With approximately 90% of production based in Vietnam, On Running implemented price increases starting July 1 to mitigate higher manufacturing expenses caused by tariffs and supply chain disruptions worldwide. CEO Martin Hoffmann highlighted that these pricing changes have not weakened demand among wholesale clients or end consumers.
“We concentrated our price hikes primarily within our lifestyle product lines while maintaining relatively stable prices for running shoes,” Hoffmann stated, “and so far, we haven’t seen any adverse impact on sales.”
Diverse Market Penetration Drives Sustained Momentum
The brand’s consistent expansion-exceeding quarterly growth rates above 30% since early this year-has once again outperformed analyst expectations this quarter.
- Earnings per share: the adjusted loss was nine cents in Swiss francs (around $0.11), though this figure does not directly align with prior forecasts due to accounting variances.
- Total revenue: Reached CHF749 million ($922 million), substantially beating estimates set at CHF705 million ($868 million).
The net loss recorded for Q2 stood at CHF40.9 million ($50.4 million) or twelve cents per share, contrasting with a net profit during the same period last year-a difference largely influenced by currency fluctuations between USD and CHF.
Global Reach Strengthened by Emerging Markets
Total sales jumped substantially from CHF568 million ($699 million) one year earlier as consumer demand surged across all major regions: Americas; Europe, Middle East & africa; and Asia-Pacific-all exceeding market expectations.
A standout contributor is China’s rapid ascent where revenues soared nearly fifty percent year-over-year in Q2 alone-a critical factor behind On’s global success story according to Hoffmann:
“Both U.S. and Chinese markets remain exceptionally strong,” he remarked, “with retail locations experiencing about fifty percent same-store sales growth alongside even more robust e-commerce results.”
A Premium Innovator Gaining Ground Against Industry Leaders
A Disruptive Force Within sportswear sector
Spearheaded from Switzerland as its inception in 2010, On Running has carved out a premium niche amid an industry long dominated by established giants such as Nike-notably making notable gains within running footwear categories where traditional sneaker demand has softened recently.
The brand’s commitment to innovation resonates powerfully as conventional sneaker segments face stagnation; meanwhile On continues delivering mid-double-digit global sales increases despite limited brand awareness outside core markets like Europe and North America.
An Effective Blend of wholesale and direct-to-Consumer Strategies
A key driver behind this momentum is balancing direct-to-consumer channels-including online platforms-with wholesale partnerships that secure valuable retail shelf space even as competitors scale back their presence there.
- Wholesale revenue: Achieved CHF441 million ($543 million), outperforming projections around CHF429 million ($528 million).
- Direct-to-consumer revenue: Recorded CHF308 million ($379 million), exceeding expected figures near CHF279 million ($344 million).
