Business Context and Reporting Period
Company: On Holding AG (NYSE: ONON)
Filing Type: Form 20-F (Annual Report)
Reporting Period: Fiscal Year Ended December 31, 2024
Business Overview: On is a premium performance sportswear brand headquartered in Zurich, Switzerland, specializing in footwear, apparel, and accessories. The company operates as a single reportable segment, selling globally through Wholesale and Direct-to-Consumer (DTC) channels. Key 2024 milestones included the introduction of LightSpray technology, a brand partnership with Zendaya, and the opening of its largest retail location on the Champs-Élysées in Paris.
Key Financial Metrics
| Metric (CHF Millions) | 2024 | 2023 | Change (%) |
|---|---|---|---|
| Net Sales | 2,318.3 | 1,792.1 | 29.4% |
| Gross Profit | 1,405.7 | 1,067.2 | 31.7% |
| Gross Margin | 60.6% | 59.6% | +100 bps |
| Operating Result | 211.6 | 180.2 | 17.4% |
| Net Income | 242.3 | 79.6 | 204.5% |
| Net Income Margin | 10.4% | 4.4% | +600 bps |
| Adjusted EBITDA | 387.6 | 276.9 | 40.0% |
| Cash and Cash Equivalents | 924.3 | 494.6 | 86.9% |
| Net Working Capital | 498.9 | 496.2 | 0.5% |
Note: All figures are in Swiss Francs (CHF). Adjusted EBITDA is a non-IFRS measure.
Material Changes vs. Prior Period
- Revenue Growth: Net sales grew 29.4% (33.2% on a constant currency basis). Growth was driven by all regions, with Asia-Pacific surging 84.5% and Americas growing 27.4%. DTC sales grew 40.3%, outpacing Wholesale growth of 22.8%.
- Profitability Expansion: Net income more than tripled (204.5% increase) to CHF 242.3 million. This was significantly aided by a reversal in foreign exchange results, which swung from a loss of CHF 111.4 million in 2023 to a gain of CHF 67.7 million in 2024.
- Expense Management: SG&A expenses increased 34.6% to CHF 1,194.2 million, primarily due to higher marketing spend (up 41.3%) and share-based compensation (up 124.8%). However, distribution expenses as a percentage of sales improved to 12.4% from 13.4%.
- Liquidity: Cash and cash equivalents nearly doubled to CHF 924.3 million, driven by strong operating cash flow of CHF 510.6 million.
Guidance, Outlook, and Risks
Outlook and Strategy: Management continues to focus on three strategic pillars: strengthening the running franchise, expanding the DTC channel (including retail stores and e-commerce), and entering new categories (Training, Tennis). The company is transitioning to highly automated warehouses in Atlanta (USA) and Beringen (Belgium) to support omnichannel growth, with full automation expected by 2025-2026.
Key Risks and Contingencies:
- Supply Chain & Geopolitics: Significant exposure to supply chain disruptions due to reliance on Vietnam (90% of footwear) and Indonesia. Risks include geopolitical conflicts (Russia-Ukraine, Israel-Hamas), Red Sea shipping disruptions, and potential trade policy changes/tariffs.
- Brand & Competition: Risks related to maintaining premium brand image, potential negative publicity regarding sustainability or labor practices, and intense competition from established players (Nike, Adidas).
- Technology Execution: Risks associated with scaling the new LightSpray manufacturing technology and integrating new automated warehouse systems.
- Foreign Exchange: As a Swiss company with significant USD and EUR exposure, fluctuations in exchange rates materially impact reported results.
Investor Verification Checklist
- Constant Currency Growth: Verify the underlying organic growth rates by reviewing constant currency sales figures, as reported growth was significantly boosted by favorable FX translation.
- Warehouse Transition Impact: Monitor operational metrics regarding the transition to the new Atlanta and Belgium automated warehouses to ensure no long-term disruption to inventory availability or delivery times.
- DTC Mix Shift: Track the continued shift in sales mix toward the higher-margin DTC channel and its impact on overall gross margin sustainability.
- Share-Based Compensation: Review the trajectory of share-based compensation expenses, which doubled in 2024, and their impact on future net income.
- LightSpray Adoption: Assess market traction and production scalability of the new LightSpray technology as a key differentiator.