Shares of On Holding (NYSE: ONON) have surged by 19% since the beginning of the year, reflecting promising prospects for continued business growth. On Holding specializes in premium-class athletic footwear and apparel. The CloudTec sneakers and sportswear have garnered a substantial following, with an increasing number of affluent consumers opting for this brand.
Endorsements and Prestige
On Holding sponsors numerous elite athletes, with Swiss tennis legend Roger Federer being a notable fan and investor in the company. Its products have attained a cult status among buyers who can afford premium prices. Setting itself apart from conventional sportswear standards, On Holding challenges industry giants like Nike, Lululemon Athletica, and Adidas.
Resilient Performance
Despite economic headwinds, On Holding’s products command higher prices, and its core clientele can afford them regardless of inflation. Consequently, the company continues to deliver strong results. In 2023, sales surged by 47% compared to the previous year, with profitability also on the rise. On Holding boasts an industry-leading gross profit margin, increasing from 56% in 2022 to 59.6% in 2023, driven by high prices and strong full-price sales.
Global Expansion and Growth Potential
While still in its nascent stages, On Holding is expanding its global brand presence. The company has robust direct-to-consumer channels and a thriving wholesale business. With a forecasted compound annual growth rate (CAGR) of 26% by 2026, On Holding’s sales growth trajectory appears achievable. The updated sales forecast for 2024 reflects a 30% increase, suggesting potential sales volumes of approximately $20 billion in 5-10 years. Such sales growth is poised to drive market capitalization upward, indicating substantial growth potential over the next 5-7 years.
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