On Holding AG Q2 FY2025 earnings call

• Product: Building iconic footwear franchises, apparel expanding fast, technological innovation, expanding to multiple sports. - Channel: Wholesale remains vital, DTC strong with 54 owned stores, global footprint with openings in key cities. - Manufacturing: LightSpray technology, first factory in Zurich. - Leadership: Founder-led, deep bench of talent from diverse nationalities.

Net sales grew by 38% on a constant currency basis to CHF 749.2 million. Gross profit margin was 61.5% and adjusted EBITDA margin was 18.2%. DTC channel net sales reached CHF 308.3 million, up 54.3% at constant currency, with DTC mix at 41.1%. EMEA net sales grew 46.1% at constant currency. Americas net sales grew 23.6% at constant currency. APAC net sales grew 110.9% at constant currency. Shoes net sales grew 36% at constant exchange rates. Apparel net sales grew 75.5% at constant exchange rates.

Increasing 2025 guidance across all line items. Expect net sales at constant currency rates to be up at least 31% year-over-year, ahead of previous guidance. Gross profit margin expected to be 60.5% to 61%, ahead of previous guidance. Adjusted EBITDA margin also increased.

Uncertain macroeconomic outlook in the second half, ongoing devaluation of the U.S. dollar against the Swiss franc, impact of tariffs on imports to the U.S. from Vietnam and Indonesia.

Q: Obviously, really outstanding results today. Just curious what gives you the confidence to raise your constant currency sales growth guidance for the year given the potential impact of tariffs in the U.S. and also at the same time, what gives you the confidence to raise your adjusted EBITDA margin guidance given the impact of tariffs?

A: Martin Hoffmann said brand has incredible momentum worldwide, strong growth in all regions, product pipeline, and momentum continues. Also, multiple opportunities to compensate for tariff impacts.

Q: Congrats on just tremendous results. Martin, maybe you could talk about the second half constant currency revenue growth, tremendous 39% growth in the first half. Obviously, with the guidance you are conservatively planning for a bit of a deceleration. Can you talk to trends you're planning in wholesale and DTC and maybe give a little bit more color regionally in terms of how we should think about the phasing of that revenue growth in the second half?

A: Martin Hoffmann said momentum is strong, want to grow in durable and premium way, additional levers being pulled, focus on high-quality growth.

Q: Congrats. We wanted to ask about the working capital improvement, margin on inventories really tight at down 10%. How do you feel about the positioning there, especially in the U.S.? Did that constrain sales growth at all during the quarter? And then secondly, you mentioned selective growth with wholesale partners a few times. Should we expect similar mid-single-digit growth and wholesale doors globally to continue into next year as well? And what are you hearing from your partners as it relates to spring orders, especially here in the U.S.?

A: Martin Hoffmann said worked on working capital, feel good about inventory position, wholesale partners have strong momentum, aim for mid-single-digit growth.

Q: Congratulations on the great results. I wanted to see if you can expand on the gross margin outlook for the year. Maybe on PAC, how much is FX helping the pricing benefits in -- if you look at tariff mitigation, do you think more price increases are needed? Or with the one you took in July, you are covered for the foreseeable future?

A: Martin Hoffmann said focus on compensating for impacts, price increase in July supports gross margin outlook, confident no additional price increases needed.

Q: Can you just help us think about the cadence of revenues in the third quarter and fourth quarter and then speak to how some of the drivers that you talked to us today about second half on revenues wrap around into the first half of 2026 as we think about the different regions and channels, particularly given the different growth rates across the regions that you guys reported in the second quarter? And then I guess I'll just last on to the last question about apparel and we'll see that strategy evolve. You mentioned Zendaya and Selfridges. I mean should we think about that category -- how should we think about that category evolving in -- with performance customers? Or is the bigger opportunity for this brand and to attack some of the big market dollars in the athleisure categories?

A: Martin Hoffmann talked about phasing of revenues, David Allemann and Caspar Coppetti talked about apparel evolving from core performance to sports fashion brand.