After 2020, 2022 and 2023, Iga Świątek could win the French Open for the fourth time this year. However, the tennis star's dream almost came to nothing in the second round of the Grand Slam tournament. In the match against Naomi Osaka, the world number one was already trailing 1:4 and 2:5 in the decisive third set. But then Świątek turned the match around and prevailed 7:6 (7:1), 1:6, 7:5 against her strong rival from Japan. The Polish player has now reached the semi-finals. In addition to the fans, those responsible for On Holding are likely to be following the tournament at the Roland Garros stadium with great interest. Iga Świątek has been a figurehead of the Zurich-based shoe manufacturer since she signed a supplier contract with the growth company in March 2023.
To coincide with the French Open, the On Holding share has made a return. The share, which is listed on the New York Stock Exchange, rose by a good third in May. Compared to the closing price at 2023, the capitalization of the holding company, whose shareholders include tennis ace Roger Federer, has increased by almost 60%. This has enabled the company to shake off the negative headlines. At the beginning of the year, the media criticized the enormous mark-ups on On shoes compared to production costs, among other things. This does not seem to have dampened the run on the Zurich-based company's products. On Holding posted record sales in the first quarter of 2024. At CHF 508.2 million, revenue was a good fifth above the previous year's level. Sales in direct sales grew particularly strongly. The company reported a 39% increase in sales in the direct-to-consumer (DTC) segment.
Co-CEO and CFO Martin Hoffmann sees this development as a sign of the continued strength of the On brand. "The significant increase in the DTC share also enabled us to achieve a very high gross profit margin in the first quarter," explained the top manager. At 59.7%, the ratio was 1.4 percentage points higher than at the beginning of 2023. On balance, On Holding earned an adjusted CHF 0.33 per share in the first three months of the year, compared to CHF 0.15 in the same period of 2023. Analysts had expected earnings per share to be significantly lower at CHF 0.14 on average. Management is therefore optimistic about the future. "We are very much looking forward to the coming months, filled with ground-breaking innovations, major partnerships and the opportunity to make a tangible impact in Paris this summer," enthused Martin Hoffmann.
The Summer Olympics will once again put France's metropolis in the spotlight of the sporting world. Athletes from industry giants Nike, Adidas and Puma will dominate the mega-event starting on August 11. Nevertheless, On has some hot irons in the fire. One of the medal candidates from the small outfitter's team is the Kenyan middle and long-distance runner Hellen Obiri. At the end of May, On presented the "Swiss Olympic Team Collection". The Olympic and Paralympic athletes from Switzerland will be wearing this outfit in Paris. The 24-piece collection is also available for fans and amateur athletes. It could therefore contribute to the targeted growth. On Holding is forecasting sales of CHF 2.29 billion or more for 2024. If this target is met, growth at constant exchange rates would reach at least 30%. With a gross margin of around 60%, between 16.0% and 16.5% of sales should remain in the operating result (adjusted EBITDA level) in the current year. By comparison: the EBITDA margin in 2023 was 15.5%.
Leonteq is launching new soft-callable barrier reverse convertibles (BRC) on On Holding just in time for the start of the 2024 sports summer. These products offer the prospect of attractive returns even if the growth stock is unable to maintain its current form. The coupon is paid regardless of the further performance of the underlying security. It amounts to 12% p.a. in the product currency CHF. With an allocation in USD, the quarterly payment is 400 basis points higher. The return opportunities are partially protected by the barrier of 59% of the initial level. If the cushion is not sufficient, the repayment would be linked to the performance of the On share. Please also note the soft callable feature: it makes early termination and redemption of this issue possible.
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