By Ananya Mariam Rajesh
(Reuters) -On Holding raised its annual sales forecast after beating quarterly revenue estimates on Tuesday, driven by strong holiday season demand for its new running shoes such as Cloud X4 and Cloudnova 2 from customers willing to pay full prices.
U.S.-listed shares of the company were up nearly 2% in early trading.
The Roger Federer-backed sportswear maker's efforts to invest in marketing by sponsoring athletes at the Paris Olympics, as well as partnering with actor Zendaya to gain more customer attention, helped bring in new buyers and also take market share from bigger rival Nike (NYSE:NKE).
Similar to On, Adidas (OTC:ADDYY) reported strong quarterly sales on growing interest for its retro style three-striped Samba and Gazelle shoes, while Nike's innovation lag and struggle to regain consumers forced it to withdraw its annual forecasts.
Heading into the holiday season, On has also responded to the growing demand for its shoes and apparel by expanding its own-store base, opening flagship stores in New York, Melbourne and Milan as it enjoys robust direct-to-consumer sales.
"The strong momentum really allows us to focus on full price," Martin Hoffmann, co-CEO and CFO of On, told Reuters in an interview, adding the company does not need discounting during the holiday season.
Retailers such as Nordstrom (NYSE:JWN) and Dick's Sporting Goods (NYSE:DKS) are also placing On and Hoka shoes at storefronts, resulting in On's wholesale revenue rising 23.2% to CHF 389.1 million.
On now expects full-year 2024 reported net sales of at least CHF 2.29 billion ($2.59 billion), versus CHF 2.26 billion forecast earlier.
"We believe these higher projections still look conservative and are bullish on growth opportunities ahead," Truist Securities analyst Joseph Civello said.
Third-quarter sales rose 32.3% to CHF 635.8 million, compared with analysts' estimate of CHF 617.3 million, according to data compiled by LSEG.
However, On's quarterly selling, general and administrative expenses increased 36% to CHF 312.7 million over last year, as part of its expansion and partnership efforts.
Its adjusted profit per share of CHF 0.16 missed the expectation of CHF 0.20.
($1 = 0.8828 Swiss francs)