On Holding shares tumbled after the brand missed second-quarter sales expectations as growth slowed in its key Americas market.
Shares in the Roger Federer-backed brand plunged as much as 22 per cent on Tuesday, putting the stock on course for its worst day on record, after quarterly sales came in below analyst forecasts.
On posted net sales of CHF850.3m (£813m) for the three months to 30 June, up 13.5 per cent year on year, or 21.6 per cent on a constant-currency basis. However, the figure fell short of analyst expectations of CHF878.2m.
Growth in the Americas, On’s largest market, slowed to 13 per cent on a constant-currency basis, compared with 17.1 per cent in the previous quarter. Sales in the region reached CHF451.6m.
The slowdown came amid a tougher consumer backdrop in the US, although the Swiss sportswear group continued to resist using heavier discounting to drive volumes.
On’s direct-to-consumer business remained a bright spot, with sales jumping 26 per cent to CHF388.4m, or 34.3 per cent on a constant-currency basis. The channel accounted for a record 45.7 per cent of second-quarter sales.
Wholesale growth was more subdued, rising 4.8 per cent to CHF461.9m, while Asia-Pacific sales surged 43.1 per cent to CHF170.5m. Apparel sales were also up 47.7 per cent during the quarter.
Despite the sales miss, On’s gross profit margin climbed to 65.4 per cent from 61.5 per cent a year earlier, while net income swung to CHF105m from a CHF40.9m loss.
The sportswear retailer has raised its full-year gross margin forecast to at least 65 per cent, while expecting constant-currency sales growth in the low-20 per cent range. This would put annual net sales at between CHF3.47bn and CHF3.56bn at current exchange rates.
On said it would continue to prioritise its premium positioning and full-price sales, while deliberately managing wholesale volumes in more promotional markets.
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