On Holding ups outlook after record Q1 as Asia-Pacific sales surge

(Sharecast News) - Record quarterly results from On Holding failed to impress the market on Tuesday with shares in the Switzerland-based premium sportswear company falling in pre-market trade despite upgraded profit guidance.

While the company maintained its forecast of 23% net sales growth forecast at constant currency, strong full-price sales and operational efficiencies have lifted the full-year gross profit margin estimate to "at least 64.5%", up from an earlier projection of at least 63%.

"Q1 was an outstanding start to the year and another strong proof point of our premium strategy in action," said founder and co-chief executive Caspar Coppetti. "On is becoming more global, more multi-dimensional and more deeply rooted in different communities around the world."

Net sales rose by 14.5% year-on-year to CHF831.9m in the first quarter, rising 26.4% at constant currency, topping the CHF800m mark for the first time.

Sales across Asia-Pacific surged 44.4% or 61.4% at constant currency to represent more than 20% of total sales, with standout performances in China and South Korea.

The company, known for its upmarket running trainers, also highlighted strong gains in sales of apparel and accessories during the quarter, at 57.5% and 86.6% on a constant currency basis respectively. Apparel, in particular, is "becoming an even more important entry point into the brand", it said, with sales reaching CHF55.3m. Shoe sales meanwhile rose 24.0% to CHF763.7m.

Earnings also hit a record high, with the gross profit margin up 430 basis points at 64.2% despite "meaningful headwinds from higher US tariffs". Adjusted net income surged to CHF123.6m from CHF70.5m.

Despite the guidance upgrade, On Holding shares were trading 2.2% lower at $33.32 with 75 minutes to go before the opening bell.