Investors Should Slice Through the Noise with Swiss-Made On Holding, the Next Lululemon – IPO Edge
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Investors Should Slice Through the Noise with Swiss-Made On Holding, the Next Lululemon
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Investors Should Slice Through the Noise with Swiss-Made On Holding, the Next Lululemon


  • Swiss sportswear maker On Holding AG is planning IPO (NYSE: ONON)
  • On has a presence in over 8,000 retailers in more than 60 countries
  • Company has delivered positive operating profits since 2014
  • Adjusted EBITDA margin expanded to 15% in the first half of 2021
  • Net sales jumped 85% in the first half of 2021
  • Investors include Stripes, Point Break Capital, Asian PE firm Hillhouse
  • Swiss tennis legend Roger Federer is an investor helped develop cutting edge shoes
  • Goldman Sachs, Morgan Stanley and JPMorgan are underwriting the IPO
  • Valuation is attractive at about 4x 2023 sales, a steep discount to Lululemon or Figs


By Jarrett Banks and John Jannarone

Swiss design is famous for precision engineering and high-quality materials. This obsession with detail also applies to running shoes and athletic wear. Soon, investors will have a chance to own a company that boasts such Swiss quality – without a luxurious price tag.

Meet Zurich-based On Holding AG (NYSE: ONON), one of the fastest growing global sports companies since it was founded in 2010. The company on Tuesday launched its IPO roadshow and plans to raise as much as $622 million, giving it an enterprise value of up to $6 billion.

On has a foothold in more than 60 countries, with North America being its biggest market accounting for 49% of total sales, followed closely by Europe at 44%. Its proprietary cushioning technology has led to a very loyal customer base—indeed some might say a cult following—in the $119 billon footwear market and $174 billon global sportswear market.

Investors include Stripes, the growth investment firm founded by Ken Fox, along with former 3G Capital dealmaker Alex Perez’s Point Break Capital, according to the filing. Secretive Asian private equity firm Hillhouse – known for home run investments in Tencent and JD – also owns a stake.

The combination of award-winning innovation, design and groundbreaking strides in sportswear’s circular economy have attracted a fast-growing global fanbase and world-class athletes. Swiss tennis champion Roger Federer became a shareholder of On in 2019, and last year the company unveiled a premium shoe he helped design and that’s named after him, which sells for about $200 a pair.

While celebrity endorsements sometimes mask poor fundamentals, that’s certainly not the case with On, which has posted an exceptional performance for a full decade. It has generated 85% annualized sales growth from 2010 to 2020 while also maintaining healthy gross margins.

Indeed, its business model is founded on innovation and premium sales channels that underpin pricing power. That translates to profits, with the company delivering a positive operating income since 2014. In the first half of 2021, adjusted EBITDA margins expanded to a healthy 15%.

On is a new-generation multichannel brand with 38% of sales in the direct-to-consumer channel. Such a large percentage of online sales gives the company both a higher margin profile and a closer connection with customers – features that have helped a company like Lululmeon captivate stock-market investors for more than a decade since its 2007 IPO.

But there are still plenty of places to see the product in person. On is also sold through more than 8,000 carefully-selected retail partners.

On also has strong ESG credentials. Last year, the company announced the first 100% recyclable running shoes available only by subscription and has committed to reduction targets in greenhouse gas emissions.

On’s sweet spot is performance and design, so the logical comparisons are with Nike and Lululemon. On is growing faster than both of them were, even in their early listing days, leaving lots of upside for investors. On’s gross margin of 54% also echoes Lululemon’s premium pricing.

Best of all, On’s shares look priced with lots of room to run. The IPO will consist of 31.1 million shares sold at $18 to $20 each. Assuming the midpoint of the range and conservative sales growth assumptions, the company will have an enterprise value of about 4 times 2023 sales.

By comparison, Lululemon trades at 6.5 times, according to Sentieo, an AI-enabled research platform. Nike (now a much more mature company with less growth) trades at 4.5 times and Figs, another direct-to-consumer apparel and health brand, trades at 10.2 times.

The company is likely to attract a strong institutional shareholder base, with an all-star team of banks taking the deal on the road. Goldman Sachs Group Inc., Morgan Stanley, JPMorgan Chase & Co., Allen & Co. LLC, UBS Group AG and Credit Suisse Group AG are arranging the offering.

Importantly, existing shareholders will also stay along for the ride. Those include co-founders David Allemann, Olivier Bernhard and Caspar Coppetti who will all keep major stakes in the company after the IPO.

Another important factor to consider is how well On has held up during the Covid disruption. The pandemic actually gave the label a boost, thanks to a lockdown-inspired boom in the running, outdoor and casual clothing sectors.

On represents a huge opportunity in North America and Europe, and the company is just hitting Asia, where consumers are known to embrace top quality. Meanwhile, cross-category expansion will drive continued growth. That, as they say in tennis, is a winner.



Jarrett Banks, Editor-at-Large

Twitter: @IPOEdge

Instagram: @IPOEdge



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