ONON stock sprinted higher early Tuesday after Swiss shoemaker On Holding, the parent company behind On Running, cleared Q1 forecasts by a wide margin.
XOn Holding (ONON) reported earnings of 36 cents per share, more than doubling from the 17 cents reported last year. FactSet analysts expected adjusted earnings to tick down 2 cents to 15 cents per share.
Revenue jumped nearly 20% to a record $561 million, although sales growth slowed for the fifth quarter in a row. Analyst consensus forecasts saw revenue jumping 16.8% to $548 million.
On's direct-to-consumer sales increased 48.7% year-over-year on a constant currency basis. DTC sales now make up 37.5% of On's total net sales.
The company maintained its outlook of at least 30% net sales growth for the year. On expects to achieve a gross profit margin of around 60% for the year.
FactSet predicts 2024 an 87.5% earnings increase, to 75 cents per share, on 23% revenue growth to $2.511 billion.
William Blair analyst Dylan Carden in a Tuesday note said the results were "a healthy print across all facets and segments of the business, suggesting continued resilient brand momentum in a difficult environment." Carden pointed to On's cleaner inventory position, which declined 21% year-over-year, continued growth in the DTC channel and positive forecast. That puts On "in a rare space for companies that can grow sales and earnings at this level, which is all the more impressive in a year that we believe is at greater risk to see more tempered demand," he wrote, adding they expect discretionary demand to slow in the summer. However, the firm believes On Running is at less risk for softer demand than the broader environment. The company should also have a strong showing at the Olympics late this year, Carden wrote. William Blair has an outperform rating on ONON shares.
On Running Stock
ONON stock spiked 18.3% Tuesday, rebounding strongly above its 50-day moving average.
The stock has been wrestling through multiple consolidations, but has managed a 34.6% gain for the year through Tuesday's close.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
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