On Holding: The Next Consumer Apparel Juggernaut?

Company Overview - ON Holding (ONON) is positioned as a strong competitor in the consumer apparel space, particularly in the footwear and athleisure segments, with a focus on high-quality products and a unique brand identity [18][19][30]. - The company has experienced significant growth, with sales nearly tripling over the last two years while maintaining stable gross margins of nearly 60% [41][30]. Product Strategy - ONON's product offerings are centered around a patented cushioning system called 'Cloudtec', which emphasizes comfort and performance for athletes and casual users alike [30][19]. - The brand has successfully expanded its appeal beyond just athletic users, attracting a broader customer base that includes non-athletic consumers [3][20]. Marketing Approach - The company prioritizes brand-building over performance marketing, which is seen as a strategic advantage in the apparel industry [5][4]. - ONON's marketing strategy effectively targets its core user base of runners, fostering a strong brand loyalty that differentiates it from trend-driven competitors [40][15]. Operational Efficiency - ONON has demonstrated a history of positive operating margins and has optimized internal spending, contributing to its profitability [8][10]. - Management is focused on improving efficiencies in HR and marketing, which is expected to enhance margins further [34][45]. Financial Performance - The company is currently trading at a sales multiple of 5.3x and a net income multiple of approximately 89x, which is expected to decrease as profitability improves [11][14]. - For FY 2024, ONON is projected to achieve an EBITDA margin of 16%, translating to an EBITDA of $409 million based on anticipated sales of $2.5 billion [45][14]. Market Position - ONON is recognized as the fifth-largest company in the consumer apparel space, significantly ahead of traditional competitors like Ralph Lauren and Under Armour [17][18]. - The brand's unique positioning and operational expertise suggest it could rival established players like Nike and Lululemon in the long term [50][15].