Executives from rising shoe brand On Running gave an update on the company’s goals, including doubling its sales in the next three years, at the ICR Conference in Orlando, Florida, earlier this week.
During their presentation, co-CEOs Marc Maurer and Martin Hoffmann spoke about the evolution of the shoe brand with its unique cushioning system.
The Switzerland-based company is on a steep upward trajectory, with $1.58 billion in net sales for the first nine months of 2023, up 58% in constant currency from the same period last year.
On posted its highest gross profit margin since its IPO two years ago, increasing to 59.9% in the third quarter 2023 from 57.1% in the comparable period in 2022.
The company has set a goal of doubling its sales for the next three years, meaning $4.1 billion to $5.86 billion in 2026, combined with an increased profitability of 18% or higher in adjusted EBITDA, according to Hoffmann.
“All of this is driven based on a very strong gross profit margin of 60%-plus, which we are very close to already today as proven in the last quarter,” he added. “We’re really combining strong sales growth with increasing profitability over time.”
Hoffmann said the brand had an “incredible year,” with strong demand during the holiday season and full-price sales. That will “hopefully” lead to another quarter of strong financials, he added.
Growth Opportunities
On started as running shoe company and moved into other areas, including the outdoor market, and is now building its tennis and training shoe lines.
Hoffmann said On’s global brand awareness is still relatively small and sees an opportunity to grow it while still selling into a premium environment.
That means working with the best wholesale partners while also selling via On’s own e-commerce channel.
“We see that our own retail becomes more and more important to accomplish and complete the premium distribution model,” Hoffmann said.
For one, On sees China as more of a direct-to-consumer market and has already built 30 stores there. “That will be another big element for us,” Hoffmann said.
Apparel Play
Accessories and apparel, including sportswear, are both categories that On is expanding into, including in the training space.
“The big opportunity comes from apparel,” Maurer said. On is relaunching its apparel collection and has seen strong response from its wholesale partners, he added.
The company is selling into more than 60 markets globally, and Maurer said there is a lot of growth opportunity internationally.
How They Built It
On was started with a motivation to disrupt the running shoe industry, according to Maurer.
“We want to disrupt how people move,” he said. “We want to get more people out there moving in all kinds of forms.”
That started with On’s product innovation in the form of its CloudTec technology. Maurer credits On’s Swiss engineering as a key reason the running shoe industry has evolved over the past 10-12 years.
“But we’re far from done,” he said. “We feel the opportunity out there is still huge, and we’re super excited to continue to, for many, many years to come, disrupt not only the running industry, but many other activities.”
Looking Ahead
The company is investing more in production, including automating some of its warehouses that Maurer said should bring down the cost per unit and increase output.
In spring, On will release the Cloudmonster 2, the second edition of the popular shoe. The brand is also releasing the Cloudmonster Hyper, which is geared toward the core runner.
On has updated its Cloudultra 2 for trail runners as well.
Similar to other leading footwear brands in the outdoor space, the brand is also releasing products purely for the lifestyle community.
“You can expect more to come over the next 12 to 24 months,” Maurer said.
Bart Schaneman can be reached at bart@ordaily.outdoorretailer.com.
