Swiss shoemaker On Holding AG, known for its collaboration with tennis star Roger Federer, is facing challenges due to the strength of the Swiss franc. Despite experiencing explosive growth in its US sneaker sales, the appreciation of the franc has hindered the company’s ability to fully capitalize on this growth. However, On raised its full-year sales guidance to at least CHF1.76 billion ($2 billion) on August 15th, though slightly below analysts’ expectations.

The weakening of the US dollar since May has had a significant currency impact on On’s sales forecast. Co-CEO Martin Hoffmann acknowledges this impact, stating, “We really continue to have the strong growth aspiration in the guidance, but it’s a bit overshadowed by the FX.” The Swiss franc has strengthened by 7.9% against the dollar in the past year, and economists predict that the Swiss National Bank will further raise interest rates in September, causing the currency to strengthen even more.

Despite these challenges, On continues to experience rapid growth in the US market. This can be attributed to the company’s expanded range of footwear and increased availability at retailers like Dick’s Sporting Goods Inc. In fact, On’s second-quarter sales of CHF444 million surpassed the average analyst estimate of CHF418 million. The company’s success is reflected in its stock, which has doubled in value this year, surpassing competitors like Nike Inc. and Puma SE.

On August 15th, On reported a 60% increase in second-quarter sales in the Americas, reaching CHF297 million. In Europe, revenue also rose by 29% to CHF114 million. The key to this success lies in On’s partnerships with retailers like Dick’s and Foot Locker Inc. However, there is still immense growth potential, as On’s products are currently only available in a small fraction of the 800 Dick’s stores.

Moving forward, On must continue to demonstrate strong growth in order to justify its stock performance and meet investor expectations. The company’s ability to navigate currency fluctuations and maintain its position in the highly competitive sneaker market will be critical. Nonetheless, On remains optimistic about its future prospects, especially in the US market, where it sees significant untapped potential.

Links:
On Holding AG Official Website
Dick’s Sporting Goods Inc. Official Website