On AG(ONON) - 2025 Q1 - Earnings Call Transcript

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]