Some time ago, I performed some research on a Swiss shoe company called ON Holdings. Based on that research I opened a small Development Squad position - thought there were better places for my money - and then sold out of it. I wanted to go back and re-visit the company - get a feel for how they are doing now - and potentially add them back to the roster with a small DS level position.
ON Holding…ONON
Here is what ONON says about ONON:
"The On mission: To ignite the human spirit through movement.
At On, we believe incredible things happen when humans move. Being in motion taps into the place in the subconscious where inspiration lies. It’s called flow state: A mindset where action and awareness blur together, leaving us fully immersed in the moment. A hack for the mind, helping us to dream bigger and better.
Technological innovation lies at the heart of On. ‘Better’ is achieved through continual experimentation. Never being afraid to start again different or break the mold. Dreaming up ground-breaking new ideas isn’t enough – we want to make them a physical reality. Today, our world-class team of scientists and technicians continue to cook up trailblazing innovations within our Zurich-based On Lab."
That might be too much Zen for a meat and potatoes investor so here is a description of ONON from Seeking Alpha:
On Holding AG engages in the development and distribution of sports products worldwide. The company offers athletic footwear, apparel, and accessories for high-performance running, outdoor, training, all-day activities, and tennis. It offers its products through independent retailers and distributors, online, and stores. The company was founded in 2010 and is headquartered in Zurich, Switzerland.
A Few Data Points:
Current Price: $40.12
52 Wk Range: 23.41 - 44.30
30 Day Momentum: -1.75%
YTD Momentum: 49.6%
Market Cap: 12.9B
EV/Sales FWD: 4.91
So…How they Doing?
Here is the most recent ER:
A few Highlights:
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net sales increased by 20.9% to CHF 508.2 million, or by 29.2% on a constant currency basis;
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net sales through the direct-to-consumer (“DTC”) sales channel increased by 39.0% to CHF 190.5 million, or by 48.7% on constant currency basis;
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net sales through the wholesale sales channel increased by 12.2% to CHF 317.7 million, or by 19.8% on constant currency basis;
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net sales in Europe, Middle East and Africa (“EMEA”), Americas and Asia-Pacific increased by 6.1% to CHF 126.2 million, 22.0% to CHF 329.6 million and 68.6% to CHF 52.4 million, respectively;
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net sales in EMEA, Americas and Asia-Pacific increased by 10.4%, 30.4% and 90.7% on a constant currency basis, respectively;
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net sales from shoes, apparel and accessories increased by 21.0% to CHF 484.7 million, 16.7% to CHF 19.7 million and 36.8% to CHF 3.8 million, respectively;
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net sales from shoes, apparel and accessories increased by 29.3%, 24.9%, 42.9% on a constant currency basis, respectively;
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gross profit increased by 23.9% to CHF 303.3 million from CHF 244.9 million;
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gross profit margin increased to 59.7% from 58.3%;
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net income increased by 106.0% to CHF 91.4 million from CHF 44.4 million;
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net income margin increased to 18.0% from 10.6%;
Here is the CC:
Here are a couple of Headlines subsequent to the Report:
On Holding Non-GAAP EPS of CHF 0.33, revenue of CHF 508.2M; reaffirms FY24 outlook
From a pure growth standpoint the YOY numbers are steadily declining:
19.59%
28.17
55.69
64.59
Current Guidance:
On with confidence to reiterate its full-year expectation of at least 30% growth in net sales on a constant currency basis, while remaining prudent in light of the dynamic macroeconomic and consumer environment.
A Couple Scouting Reports:
The bottom line here is that the shoes are hot but the apparel leaves something to be desired. Interestingly enough - after the May report the stock soared from $30.40 on May 10 all the way to $43.79 by June 11 for a 44% gain. Since then, the stock price consistently eroded down to a low of $36 and some change. The chart actually shows a double bottom around a tight time frame. It has edged back up to today’s close of $40.12.
ONON actually has a great deal of potential and a small DV position could be appropriate if an investor has patience to follow the story. As always just my amateur opinion.
Last Note: The company has a Spray On shoe that I am considering ordering. My plan is to wait until the All-Too-Lovely is sound asleep and then spray some running shoes on her. There are two issues with this: I can see no way to escape responsibility; and 2) She is a light sleeper. Gonna have to work on it.
CIG: 292
All the Best,
BDH Investing