Sneaker brand On missed forecasts, shares plummeted, and Federer lost his billionaire status
Swiss sports footwear brand On reported second-quarter results that missed analyst expectations. Following a slowdown in US sales growth, the company's shares plunged by 22%.
The Swiss sports footwear brand On missed forecasts in the second quarter against the backdrop of a slowdown in growth in the US market. Following the publication of the results, the shares traded in the US fell by 22% and recorded their worst daily performance.
The Swiss company, founded in 2010 and known for its unique soles that include holes, reported sales of 850.3 million Swiss francs (1.05 billion dollars) for the three months ending June 30, while analyst forecasts expected revenue of 878.16 million francs. In addition, the company reported an adjusted profit of 0.35 francs per share.
The company, in which tennis legend Roger Federer is invested, is dealing with a more challenging macroeconomic environment in the US, which is its largest market, even though it has managed to eat into the market shares of the two largest players, Nike and Adidas, in recent years. Thus, sales growth in the Americas, which represent more than half of On's revenue, slowed to 13% from 17% in the first quarter, while in the Asia-Pacific region, sales jumped by 54.17%.
The slowdown in growth in the US could push the company to lower prices, as its rivals have done, despite the expected damage to profitability. At this stage, the company is still ruling out this possibility.
"We are not in a rush to achieve sales in the short term, but rather we are intentionally engineering the long-term value of a premium brand," said CEO David Allemann in a call with analysts after the results were published.
Direct-to-consumer sales through brand stores and the internet rose by 34% in the quarter, while wholesale sales through retail chains rose by 12.7% compared to a 25.1% increase in the previous quarter.
Following the decline in the company's shares after the report, Roger Federer lost his billionaire status. He holds 2.5% of the company, and according to Forbes magazine, the decline wiped out 52 million dollars from his net worth, so Federer's fortune now stands at 952 million dollars, compared to an estimated fortune of 1.1 billion dollars last year. He will likely have to settle for the 20 Grand Slam titles he achieved throughout his career.
