Shares of shoe company On Holding (ONON +4.26%) jumped to new 52-week highs on Tuesday after the company reported financial results for the first quarter of 2024. As of 10:30 a.m. ET, On stock was up 15%.
Consumers are buying more shoes directly from On
On is based in Zurich, and reports its earnings results in Swiss francs. But I'll reference the approximate U.S. dollar equivalent for simplicity.
In Q1, On generated record quarterly net sales of over $560 million, which was up 29% year over year when adjusted for fluctuations in the currency exchange rates. It's not just encouraging to see record sales come in above expectations, but it's also encouraging to note what drove the quarter's outperformance.
NYSE: ONON
Key Data Points
On's Q1 outperformance was driven by direct-to-consumer (DTC) sales. The company's DTC sales were up 49% when adjusted for currency fluctuations and accounted for nearly 38% of its total net sales. DTC sales have higher profit margins as well and On consequently achieved an impressive net profit margin of 18%.
Overall, it was a good report from the shoe stock and worth getting excited about.
This growth stock has legs
The valuation for On stock and the ceiling on its long-term upside are entirely different discussions. But suffice it to say this is a growth story that likely has many more chapters ahead.
In the grand scheme of global shoe sales, On is a small brand at its current scale. But the brand is enjoying a surge in consumer awareness, which drives its DTC sales growth. That's hard to come by and it's the kind of thing that can keep driving growth on the top and bottom lines.
If I were a shareholder, I'd be very happy with On's Q1 and I'd be content to keep holding my shares.
