ON

Founded in 2010, ON is a sports apparel and shoe brand established in Zurich, Switzerland. Olivier Bernhard, a retired athlete, envisioned crafting a running shoe that offered a completely different running sensation compared to what was on the market. Early prototypes featured sections of hosepipes attached to the bottom of the shoe.

In their most recent financial report as of September 30, 2023, ON revealed total sales amounting to CHF* 480 million (USD/CHF = 0.915) and a net income of CHF 58 million. Both revenue and net income experienced impressive growth, surging by 47% and 184%, respectively, compared to the corresponding quarter of the previous year. Notably, ON’s gross margin expanded from 57.1% in Q3 2022 to 59.9% in Q3 2023. This expansion was attributed to ON’s strategy of refraining from discounting products to boost sales, coupled with an increased proportion of direct consumer sales through their website.

During their earnings call, ON emphasized a strategic focus on increasing sales through their Direct-to-Consumer (DTC) channel while also nurturing relationships with third-party sellers. Despite being in its relative infancy, ON is gearing up for expansion by diversifying its product lines to captivate a broader customer base. Like many sports brands, ON is leveraging the allure of sports stars to enhance brand recognition. Given ON’s size, they need to use innovative approaches to attract “superstar” athletes. In 2019, they successfully secured Roger Federer as a collaborator by issuing equity to him. ON’s recent successes on the sports field include Helen Obiri winning the Boston Marathon wearing ON CloudTr1 1 and Iga Swaitek who also wears ON shoes on the tennis court.

Retail brands operate in a fiercely competitive environment. They generally require years to establish genuine customer loyalty. To stay competitive, these companies must consistently invest in brand and product development, while maintaining their brand identity.

*CHF = Swiss Francs

On Holdings is held in the Lunar BCI Worldwide Flexible Fund. It is also held by Lunar Capital’s Offshore Portfolio clients.