ONON's Rapid DTC Expansion Tests Whether It Can Outgrow Wholesale

Core Insights - ON Holding AG (ONON) is transitioning its business model towards higher-margin direct-to-consumer (DTC) channels, with a notable increase in DTC sales growth compared to wholesale [2][5] Sales Performance - DTC net sales increased by 27.6% on a reported basis and 37.5% on a constant-currency basis, while wholesale sales grew by 23.3% reported and 32.5% in constant currency [3] - The DTC channel now accounts for 39.6% of total net sales, up from 38.8% year-over-year, indicating a shift in the sales mix [3][9] - The wholesale channel's share of net sales decreased by 80 basis points year-over-year [3][9] Strategic Initiatives - Management emphasizes the strengthening relationship between e-commerce and owned retail, as omnichannel customers exhibit higher loyalty and lifetime value [4] - The retail network is expanding in key global cities, enhancing brand positioning through premium store design and digital experiences [4] Competitive Landscape - Competitors like Deckers and Wolverine are also focusing on balancing their channel strategies, with Deckers aiming for a 50% split between DTC and wholesale channels [6] - Wolverine is prioritizing DTC across its portfolio, with notable growth in its e-commerce channel [7] Market Performance - ON Holding shares have increased by 22.6% in the past month, outperforming the industry average of 11.6% [8] Financial Metrics - The Zacks Consensus Estimate for ONON's current financial-year sales indicates a year-over-year growth of 41.6%, while earnings per share are expected to decline by 12.7% [11] - Current estimates for sales and earnings per share show significant growth expectations for the upcoming quarters [14][15]