Federer-backed On retains annual sales forecast after quarterly beat, shares fall
Adds analysts comments in paragraphs 6 & 9 and updates shares
By Ananya Mariam Rajesh
Aug 13 (Reuters) -On Holding ONON.N beat analysts' estimates for second-quarter revenue on Tuesday on strong demand for its shoes and apparel from customers looking for trendy products, but shares fellabout 3% as the company maintained its annual forecast.
The company cited low stock due to capacity constraints and supply challenges at its Atlanta distribution center, which is being automated.
"We have experienced shipping delays, but we also experienced out-of-stock situations towards our DTC channel ... while we posted a record quarter, it could have been even stronger if we would not have had those impacts," co-CEO and Chief Financial Officer Martin Hoffmann told Reuters.
The forecast reflects the company's expectation of continued disruption for the next few months, he said.
The Roger Federer-backed company maintained its 2024 net sales growth forecast of at least 30% in constant currency.
Telsey Advisory Group analyst Cristina Fernandez said the guidance would disappoint investors, "who have come to expect a beat and raise every quarter."
On's U.S.-listed shares have risen nearly 47% so far this year, as the company and Hoka-owner Deckers Outdoor DECK.N edge out sportswear giant Nike NKE.N for shelf and online space at retailers including Dick's Sporting Goods DKS.N and Foot Locker FL.N in the running shoe category.
On has signed a multi-year partnership with actress Zendaya and launched products in the running and trail categories, looking to tap into the trend of customers willing to splurge on comfortable and new products at full price even as they remain cautious about big-ticket purchases.
"In our view the brand's momentum remains robust and we believe the awareness they are gaining from their strategic wholesale expansion, the Olympics and their Zendaya partnership will continue to accelerate growth trends in second half," Truist Securities analyst Joseph Civello said in a note.
On, which is the official sponsor of the Swiss Olympic team and Poland's tennis Grand Slam champion Iga Swiatek, reported a nearly 28% jump in second-quarter sales to 567.7 million Swiss francs ($655 million), compared with LSEG estimates of 560.9 million Swiss francs.
Adjusted profit of 0.15 Swiss francs per share narrowly missed estimates of 0.16 Swiss francs.
($1 = 0.8664 Swiss francs)
Shares of major sportswear companies https://reut.rs/3AjIly9
Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Sriraj Kalluvila
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