Why On Stock Dropped 19% in February

Company Overview - On is a Swiss-based athletic wear company competing in the premium space with a distinctive Cloud-tech footwear designed for comfort [2] - The brand is establishing a strong global presence and has received extremely positive reception, indicating strong customer loyalty [3] Financial Performance - In Q4 2024, On's sales increased by 40% year over year, driven by a 48% increase in direct-to-consumer sales [3] - Shoe sales grew by 39%, while apparel and accessories saw even higher growth rates of 83% and 86% respectively [3] - The company achieved a gross margin of 62.1%, up from 60.4% the previous year, and net income increased by 435% in the quarter [4] Market Position and Growth Outlook - Management is guiding for a 27% sales increase in 2025, with an expected gross margin of 60.5% for the full year [4] - Despite a deceleration in growth due to inflationary pressures, On has significant opportunities for brand establishment and customer loyalty [5] - The stock, while previously expensive, is now considered more attractive at its current price, trading at a forward one-year P/E ratio of 32 [6] Investment Perspective - There is potential for On to achieve steady double-digit growth for several years, presenting a buying opportunity on the recent dip [7]