By Alan Hatfield
On Holding AG (NYSE: ONON) updated its 2022 guidance, reporting record quarterly and annual financial results.
Fourth quarter net sales jumped 53.7% year-on-year, driven by a 76.7% increase in direct-to-consumer sales and a 39.3% increase in wholesale, lifting 2021 annual net sales to a record CHF 724.6 million, up 70.4% for the year. Gross margin for the quarter came in at 58.5%, up from 51.7% reported for the fourth quarter of 2020, helping register a record adjusted EBITDA of 13.3% for 2021, up from 11.7% in the prior year.
IPO Edge previously reported on the athletic-shoe and sportswear phenom’s stellar Q3 performance and Q4 capped off an even more impressive sprint to the finish line in 2021 despite major secular headwinds from the ongoing global response to the Covid-19 pandemic and associated supply chain woes.
“This year was just like a marathon race and Q4 saw the last mile get even harder because of major headwinds we faced, especially given the ongoing Covid-19 lockdowns in many of our biggest markets, especially in Central Europe,” Co-CEO and CFO Martin Hoffmann said. “However, our entire team performed extremely well under the pressure and capitalized on strong global demand to produce quarterly results that exceeded all expectations.”
With relatively open retail channels, North America proved a massive growth market for the company in 2021, with net sales up 96.8% on the year aided by momentum from On’s September 2021 IPO on the NYSE. China led the brand’s growth in the Asia-Pacific region, with net sales up 85.8% for the year.
The situation was more difficult in Europe, where repeated Covid-19 lockdowns damped retail availability and a low inventory buffer made meeting demand a difficult task. Regardless, prioritized inventory flow to key accounts and favoring direct-to-consumer channels saw healthy net sales growth in the region of 38.8% for the year.
“Despite the unique inventory and supply chain challenges we faced in Europe given stricter lockdowns, we’ve managed to get all factories up and running at 100% pre-lockdown levels since early December,” Hoffmann commented. “We now have more certainty and a higher level of planability knowing that our factories are up and running, and therefore more supply to fulfill demand in the first half of 2022.”
On’s performance in 2021 was aided by a series of innovative product launches, including the Cloudultra trail-running shoe, Cloudstratus maximum cushion running shoe, and best-selling Cloud 5, in addition to the continued expansion of the company’s apparel line across both lifestyle and outdoor verticals. The launches are set to continue into the new year, with the highly-anticipated Cloudmonster set to launch in April and ever more shoes for different kinds of runners to launch throughout the year.
The company also continued to build on its array of partnerships, expanding distribution to JD and Footlocker in the second half of 2021 with a planned initial pilot with Dick’s Sporting Goods starting in the second half of the coming year. On the sponsorships front, On recently signed a multi-year agreement with Penn relays and has plans to replicate its Boulder, Colorado-based On Athletic Club in Europe and Australia among other markets.
Alan Hatfield, Director of Research