Core Viewpoint - ON Holdings' stock price surged by over 10% following the Q1 earnings release and 2025 guidance update, indicating a strong performance in the high-end retail sector and a potential price reversal for the stock [3][4]. Financial Performance - Q1 revenue increased by 43% year-over-year to approximately $862.9 million, driven by strong direct-to-consumer (DTC) and wholesale sales [7][9]. - Direct-to-consumer sales rose by 42.4%, while wholesale sales grew by 38.6%, showcasing robust performance across all operating segments and regions [7][8]. - The core business of shoes grew by 40.5%, with apparel and accessories seeing significant growth of 93% and 97% respectively [8]. Margin and Profitability - Gross margin improved due to enhanced efficiency and a favorable selling environment, although earnings were down compared to the previous year due to foreign exchange shifts [9]. - Despite the earnings contraction, the company maintains profitability, a healthy balance sheet, and rising equity [9]. Future Guidance - ON Holdings raised its growth forecast for Q2 from at least 27% to 28%, with potential for further increases later in the year [10]. - Executives expressed a cautious outlook on profit, anticipating expansion relative to Q1 results, with expectations of sustaining double-digit top-line growth through the end of the decade [11]. Market Sentiment and Analyst Ratings - The current 12-month stock price forecast is $58.18, indicating a 1.34% upside, with a consensus rating of Buy based on 23 analyst ratings [13]. - Short interest remains elevated at nearly 6%, but has decreased from its peak, suggesting potential for a short-covering rally [14]. - Analysts had previously reduced price targets, but sentiment may shift positively following the earnings results, potentially leading to new all-time highs [15].

Group 1 - The U.S.-China trade negotiations have positively impacted the markets, leading to a sharp rally as if tariffs were never announced, with the S&P 500 now in flat territory for the year [1] - Valuation multiples in the market are currently very stretched despite the ongoing presence of economic uncertainties [1] Group 2 - Gary Alexander has extensive experience in covering technology companies and has been involved with seed-round startups, providing insights into current industry themes [1] - He has been a contributor to Seeking Alpha since 2017 and has been quoted in various web publications, with his articles reaching popular trading apps like Robinhood [1]

Core Insights - The sports footwear and apparel industry demonstrates resilience amid a sluggish global economic recovery and differentiated consumer demand, outperforming other sectors [1][2] - The analysis includes 19 brands/groups, primarily publicly listed companies, with revenue data for the 2024 calendar year, adjusted for fiscal year discrepancies and currency fluctuations [1][2] Global Market Overview - Total global revenue for the 18 brands/groups in 2024 is approximately $183.61 billion, reflecting a 3.78% increase from 2023 [8] - Nike and Adidas remain the dominant players, while Lululemon has surged to third place, surpassing Puma and VF Corporation [6][7] - The industry structure remains stable, with a leading tier of Nike and Adidas, followed by a growing middle tier including Decathlon, Anta, VF, and Lululemon [7][8] Chinese Market Insights - The total revenue for the Chinese market is estimated at around $37 billion for 2024, with an 8.8% year-over-year growth, outpacing global growth [14] - Anta Group leads the Chinese market, with significant contributions from its multi-brand strategy, while Nike retains the top position for single-brand revenue [14][15] - The competitive landscape in China features intense rivalry among brands like Anta, Li Ning, Adidas, and FILA, with Puma also showing growth [14][15] Growth Drivers - Running remains the highest growth segment in the sports footwear and apparel industry, with brands like HOKA and On experiencing significant revenue increases [15][16] - Outdoor brands, particularly those appealing to the middle class, are also thriving, driven by a shift in consumer identity and preferences [16] Future Considerations - The industry faces challenges related to brand positioning in either stock or incremental competition, necessitating strategic decisions on growth potential and market dynamics [17] - Established brands are undergoing transformations while new entrants must navigate consumer expectations and market integration [17]

Financial Data and Key Metrics Changes - Net sales reached CHF 726.6 million in Q1 2025, reflecting a year-over-year growth of 43% on a reported basis and 40% on a constant currency basis, marking the highest quarterly net sales in the company's history [27][39] - Gross profit margin increased to 59.9%, up from 59.7% in Q1 2024, driven by an increased direct-to-consumer (DTC) share [39] - Adjusted EBITDA margin for Q1 was 16.5%, up from 15.2% in the same period last year [39] - Net income reached CHF 56.7 million despite a sizable unrealized foreign exchange loss [40] Business Line Data and Key Metrics Changes - DTC channel net sales grew by 45.3% year-over-year, reaching CHF 276.9 million, with DTC share increasing to 38.1% from 37.5% [27][28] - Wholesale sales grew by 41.5% year-over-year, reaching CHF 449.7 million [29] - Apparel net sales reached CHF 38.1 million, increasing by 93.1% year-over-year, marking the highest quarterly net sales in history for this category [37] Market Data and Key Metrics Changes - Europe, Middle East, and Africa (EMEA) region grew by 33.6% on a reported basis, reaching CHF 168.6 million [30] - The Americas region saw net sales grow by 32.7% year-over-year to CHF 437.4 million [31] - Asia Pacific region experienced significant growth of 130.1% on a reported basis, reaching CHF 120.6 million [32] Company Strategy and Development Direction - The company is committed to maintaining its premium brand positioning and product promise, which is seen as a key differentiator in the market [10] - Focus on continuous product innovation and strategic partnerships to enhance brand awareness and cultural relevance [11][13] - Plans to expand retail presence while maintaining a controlled pace of store openings, aiming for a 10% revenue share from stores [87] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the brand's strength and consumer demand, despite macroeconomic uncertainties and potential tariff impacts [42][43] - The company has increased its constant currency growth rate outlook for 2025 to at least 28% [44] - Management emphasized the importance of operational efficiencies and strategic investments to drive long-term sustainable growth [47] Other Important Information - The company announced a leadership transition, with Martin Hoffmann set to become the sole CEO from July 1 [18][21] - The company has been recognized as the most innovative company in the design category by Fast Company for its LightSpray technology [15] Q&A Session Summary Question: Brand awareness and growth drivers in the Americas - Management highlighted that brand campaigns have significantly increased brand awareness, with strong growth continuing into April [51][52] Question: Improved constant currency growth outlook - Management confirmed that the outlook reflects strong growth across all regions and channels, with e-commerce and retail driving significant growth [62][66] Question: Mitigation efforts for tariff impacts - Management stated that the outlook assumes current tariffs and emphasized the brand's ability to increase prices to mitigate impacts [71][73] Question: Success of the apparel offering - Management noted that harmonized sizing and targeted campaigns have driven success in apparel, with strong performance in running, training, and tennis categories [78][80] Question: Store rollout performance - Management reported that 18 out of 20 stores outside China exceeded expectations, contributing positively to the brand's premium positioning [84][86] Question: Wholesale channel growth outlook - Management confirmed that the outlook for wholesale growth remains unchanged, with a focus on controlled expansion and maintaining inventory clarity [106][108]

Financial Data and Key Metrics Changes - Net sales reached CHF 726 million, reflecting a year-over-year growth of 40% on a constant currency basis, marking the highest quarterly net sales in the company's history [6][24] - Gross profit margin increased to 59.9%, up from 59.7% in Q1 2024, driven by an increased direct-to-consumer (DTC) share [36] - Adjusted EBITDA margin for Q1 reached 16.5%, up from 15.2% in the same period last year [37] - Net income was CHF 56.7 million, despite a sizable unrealized foreign exchange loss [38] Business Line Data and Key Metrics Changes - DTC channel net sales grew by 45.3% year-over-year, reaching CHF 276.9 million, with DTC share increasing to 38.1% [24] - Wholesale sales grew by 41.5% year-over-year, reaching CHF 449.7 million [27] - Apparel net sales reached CHF 38.1 million, increasing by 93.1% year-over-year, marking the highest quarterly net sales in history for this category [34] Market Data and Key Metrics Changes - Europe, Middle East, and Africa (EMEA) region grew by 33.6% year-over-year, reaching CHF 168.6 million [28] - The Americas saw net sales growth of 32.7% year-over-year, totaling CHF 437.4 million [29] - Asia Pacific region experienced a remarkable growth of 130.1% year-over-year, reaching CHF 120.6 million [30] Company Strategy and Development Direction - The company is committed to maintaining its premium brand positioning and product promise, which is seen as a key differentiator in the market [8][41] - Focus on continuous product innovation and strategic partnerships to enhance brand awareness and cultural relevance [12][14] - Plans to expand retail presence while maintaining a controlled pace in store openings, aiming for 20 to 25 new stores annually [84] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the brand's strong momentum and consumer demand, despite macroeconomic uncertainties and potential tariff impacts [40][41] - The company has increased its constant currency growth rate outlook for 2025 to at least 28%, projecting reported net sales to reach at least CHF 1 billion [42] - Management emphasized the importance of operational efficiencies and strategic investments to drive long-term sustainable growth [44] Other Important Information - The company announced a leadership transition, with Martin Hoffmann stepping into the role of sole CEO from July 1 [16] - The introduction of innovative products like LightSpray is expected to define the future of sportswear and enhance operational capabilities [14][15] Q&A Session Summary Question: Brand awareness and growth drivers in the Americas - Management highlighted that brand efforts and campaigns have significantly increased brand awareness, contributing to strong growth in the Americas [48][49] Question: Improved constant currency growth outlook - Management confirmed that all regions are performing well, with strong growth expected across all channels [58][60] Question: Mitigation efforts for tariff impacts - Management stated that the outlook assumes current tariffs and emphasized the brand's ability to increase prices to mitigate impacts [68][70] Question: Success of the apparel offering - Management noted that harmonized sizing and targeted campaigns have driven significant success in the apparel category [74][76] Question: Store rollout performance - Management reported that 18 out of 20 stores outside China have exceeded expectations, contributing positively to revenue and margins [82][84] Question: Wholesale channel outlook - Management indicated that there are no cancellations in the wholesale order book and that demand remains strong [100][101] Question: Changes in strategy with leadership transition - Management reassured that the strategy remains unchanged and that the internal team is strong and capable [107]

Company Performance - On Holding (ONON) reported quarterly earnings of $0.23 per share, missing the Zacks Consensus Estimate of $0.24 per share, and down from $0.38 per share a year ago, representing an earnings surprise of -4.17% [1] - The company posted revenues of $808.1 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 3.76%, compared to year-ago revenues of $581.41 million [2] - Over the last four quarters, On Holding has surpassed consensus EPS estimates just once, but has topped consensus revenue estimates three times [2] Stock Performance and Outlook - On Holding shares have lost about 6.3% since the beginning of the year, while the S&P 500 has declined by -0.6% [3] - The company's earnings outlook is mixed, with the current consensus EPS estimate for the coming quarter at $0.29 on revenues of $835.81 million, and $1.18 on revenues of $3.4 billion for the current fiscal year [7] - The current Zacks Rank for On Holding is 3 (Hold), indicating that shares are expected to perform in line with the market in the near future [6] Industry Context - The Retail - Apparel and Shoes industry, to which On Holding belongs, is currently in the bottom 39% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Genesco (GCO), another company in the same industry, is expected to report a quarterly loss of $2.06 per share, with revenues projected at $463.91 million, reflecting a year-over-year increase of 1.4% [9]

Core Viewpoint - On Holding AG (ONON) is expected to report its first-quarter 2025 results on May 13, with earnings per share estimated at 24 cents, reflecting a 36.8% decline from the previous year, while revenues are projected to increase by 34% to approximately $778.9 million [1][2]. Group 1: Earnings Performance - ONON has beaten the Zacks Consensus Estimate in two of the last four quarters, with an average surprise of 45.6% [1]. - The earnings per share estimate for the first quarter indicates a significant decline compared to the same quarter last year [2]. Group 2: Revenue Expectations - The consensus revenue estimate for the first quarter is nearly $778.9 million, suggesting a 34% increase from the previous year's figure [2]. Group 3: Factors Influencing Performance - The company's performance is anticipated to benefit from strong direct-to-consumer traction, global expansion, and ongoing product innovation, particularly among younger consumers [3]. - Key product launches, including Cloudmonster, Cloudsurfer, and Cloud 6, are expected to support the company's performance [3]. Group 4: Direct-to-Consumer Strategy - ONON's direct-to-consumer strategy, which includes retail and e-commerce, is a primary growth driver, supported by high brand engagement and creative marketing campaigns [4]. - The company has leveraged significant marketing initiatives, including a Super Bowl advertisement featuring Roger Federer and Elmo, to enhance traffic and conversion rates [4]. Group 5: Geographic Performance - The Asia-Pacific region, especially China, Japan, and Southeast Asia, has shown accelerated growth due to retail expansion and targeted campaigns [5]. - In Europe, brand-building efforts and a strong retail presence in cities like Paris and Milan have contributed to performance, while in the Americas, premium positioning and selective partnerships have fueled growth [5]. Group 6: Cost Considerations - Increased investments in brand marketing and technology infrastructure may have impacted margins, alongside transitional costs from a new automated warehouse in Atlanta [6]. - Foreign exchange fluctuations, particularly between the U.S. dollar and Swiss franc, could also affect margins in the first quarter [6]. Group 7: Earnings Prediction Model - The model predicts an earnings beat for ONON, supported by a positive Earnings ESP of +4.17% and a Zacks Rank of 3 [7].

Core Insights - On Holding AG (NYSE: ONON) has experienced significant growth due to innovative and comfortable running shoe designs, leading to rapid revenue expansion and increased market share from competitors [1] Company Performance - The company's stock performance is closely tied to its ability to attract consumers through product innovation and comfort [1] Market Position - On Holding AG is successfully capturing notable market share in the running shoe industry, indicating strong competitive positioning [1]

Company Performance - On Holding (ONON) closed at $48.20, reflecting a -1.41% change from the previous day, underperforming the S&P 500, which fell by 0.77% [1] - Over the past month, shares of On Holding have increased by 19.33%, surpassing the Retail-Wholesale sector's gain of 9.54% and the S&P 500's gain of 11.54% [1] Upcoming Earnings Report - On Holding is set to release its earnings report on May 13, 2025, with an expected EPS of $0.24, indicating a 36.84% decrease from the same quarter last year [2] - The consensus estimate for revenue is $773.88 million, representing a 33.1% increase from the prior-year quarter [2] Fiscal Year Estimates - For the entire fiscal year, Zacks Consensus Estimates predict earnings of $1.19 per share and revenue of $3.39 billion, reflecting changes of +8.18% and +28.48% respectively from the previous year [3] - Analysts' estimate revisions are crucial as they indicate the evolving nature of business trends, with positive revisions suggesting optimism about the company's profitability [3] Valuation Metrics - On Holding currently has a Forward P/E ratio of 41.08, which is significantly higher than the industry average Forward P/E of 13.78 [6] - The company's PEG ratio stands at 1.96, compared to the industry average PEG ratio of 1.43 [6] Industry Context - The Retail - Apparel and Shoes industry, which includes On Holding, has a Zacks Industry Rank of 186, placing it in the bottom 25% of over 250 industries [7] - Historically, the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]

Core Viewpoint - The market anticipates On Holding (ONON) to report a year-over-year decline in earnings despite an increase in revenues when it releases its quarterly results for the period ending March 2025 [1][2]. Earnings Expectations - On Holding is expected to report earnings of $0.24 per share, reflecting a year-over-year decrease of 36.8% [3]. - Revenue projections stand at $773.88 million, which represents a 33.1% increase compared to the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has been revised down by 0.94% over the last 30 days, indicating a reassessment by analysts [4]. - The Most Accurate Estimate for On Holding is higher than the Zacks Consensus Estimate, resulting in a positive Earnings ESP of +4.17% [10][11]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive Earnings ESP reading is a strong indicator of an earnings beat, especially when combined with a Zacks Rank of 1 (Strong Buy), 2 (Buy), or 3 (Hold) [8]. - On Holding currently holds a Zacks Rank of 3, indicating a likelihood of beating the consensus EPS estimate [11]. Historical Performance - In the last reported quarter, On Holding exceeded the expected earnings of $0.20 per share by delivering $0.38, resulting in a surprise of +90% [12]. - Over the past four quarters, On Holding has beaten consensus EPS estimates two times [13]. Industry Context - In the Zacks Retail - Apparel and Shoes industry, Tapestry (TPR) is expected to report earnings of $0.89 per share for the same quarter, reflecting a year-over-year increase of 9.9% [17]. - Tapestry's revenue is projected to be $1.53 billion, up 3.1% from the previous year [17].