On Holding: a challenge for the Giants in Activewear

On Holding AG $ONONa Swiss manufacturer of athletic footwear and apparel, is emerging as a strong competitor to established giants such as Nike and Lululemon Athletica. On Holding, best known for its innovative CloudTec sneakers, offers products aimed at top athletes, allowing it to appeal to a wide range of customers.

Innovative Products and Market Strategies

CloudTec sneakers: a distinctive feature is the innovative sole that provides extreme comfort. The company offers footwear for various sports as well as lifestyle footwear and sportswear.

Financial Performance

Despite inflationary pressures, $ONONhas seen significant growth. In the first quarter of 2024, sales grew 29% year-over-year (currency neutral), with direct sales to customers increasing 49%. Direct sales account for 38% of total sales, positively impacting margins.

High margins: the company's premium pricing policy delivered a gross margin of 59.7%, well above the industry average. Net profit more than doubled from last year.

Market Penetration and Opportunities

$ONON is still relatively unknown in many of its markets, including Switzerland, where it has only 49% brand penetration. This low penetration, combined with high customer loyalty, presents a huge opportunity for long-term growth and profits.

Stock valuation

Shares of $ONON trade at a high price-to-sales ratio in excess of 8, but with a reasonable forward one-year price-to-earnings ratio of 34. While the valuation is not cheap, it reflects the potential for rapid growth and many opportunities for future expansion.

On Holding has strong potential to become a major player in the activewear industry. With innovative products, premium pricing and strong customer loyalty, the company is positioned for long-term growth and profits. An investment in On Holding shares may be attractive to those looking for growth opportunities and who believe in the company's potential in the international market.