Wall Street rises as materials and crypto stocks offset continued bond sell-off
Investing.com -- On Holding shares plunged Tuesday after the Swiss sportswear maker reported second-quarter revenue that fell short of expectations and lowered its sales growth outlook for the full year.
The company reported second-quarter earnings per share of CHF 0.31, beating the analyst estimate of CHF 0.29. Revenue rose 21.6% on a constant currency basis to CHF 850.3 million, but missed the CHF 881.4 million consensus estimate.
The company’s shares sank nearly 22% in early U.S. hours by 09:45 ET (13:45 GMT).
Growth in the quarter was led by exceptional strength in On’s direct-to-consumer channel, which grew 34.3% on a constant currency basis, exceeding expectations in every region. Asia-Pacific again contributed more than 20% of global net sales, powered by momentum in Japan, South Korea and Greater China. Apparel net sales surged 56.2% on a constant currency basis.
Profitability improved, with gross profit margin reaching 65.4%, up 3.9 percentage points year-over-year, even as the company fully absorbed higher U.S. import tariffs and excluded any tariff refunds. Adjusted EBITDA margin rose to 19.8% from 18.2% a year earlier, with adjusted EBITDA totaling CHF 168.1 million.
For the full year, On expects net sales growth in the low-20% range on a constant currency basis, loweref from at least 23% previously, and below the 24.7% consensus cited by Citi. At current spot rates, On said that implies net sales of CHF 3.47 billion to CHF 3.56 billion, versus a consensus estimate of CHF 3.56 billion.
The company raised gross margin guidance to at least 65.0%, from at least 64.5%, and compared to the 64.4% consensus, while maintaining adjusted EBITDA margin guide in the range of 19.5% to 20.0%.
"F26 sales guidance was lowered as mgmt deliberately manages wholesale sell-in to protect full-price integrity in a more promotional environment and make room for new innovations leading into F27. The 2Q sales miss and lowering of F26 sales guidance (weak implied 2H guidance) will likely put significant pressure on the stock today," Citi analysts said.
