According to Martin Hoffmann, the company is in a position to state that, even with the tariffs, it would still be far ahead of its long-term gross profit expectations.
- Hoffmann noted that the company was “very well-positioned” heading into the holiday season.
- He added that On’s retail store openings were very important, mainly because of the growth that the company wants to achieve with apparel.
- Hoffmann said that in March of next year, or in the spring of next year, both the Cloudrunner and the Cloudmonster will be updated.
On Holding (ONON) CEO and CFO Martin Hoffmann believes that the company has not seen a slowdown in demand resulting from the price hikes and is preparing to launch a fresh line of product upgrades next year.
Earlier in the day, the company raised its annual sales forecast for full-year 2025 to increase by 34% year-over-year on a constant currency basis, compared with the previously forecasted rise of at least 31%. This is building on strong demand for its core footwear and in key markets such as the United States, where the firm has been able to fend off competition and gain traction in an otherwise weak demand environment.
The U.S. consumer environment is now facing price increases on products resulting from President Donald Trump’s tariffs on Asian countries, such as Vietnam, China, and Indonesia, which are the manufacturing locations for Nike, Adidas, Lululemon, and On Holding.
In an exclusive interview with Stocktwits, CEO Hoffmann discussed price hikes, new launches, store openings, and more.
Q. How have customers responded to the price hikes that went into effect?
Our vision and aspiration are to be the most premium global sportswear brand. And this comes by investing in the product side in the innovation, in the quality, in the design, in the sustainability, by investing in the experience that you have when you go to our shops, by the experience that you have when you engage in our community events, when you see our athletes, and so on.
I think it becomes very clear that this is a strategy that clearly sets us apart from many, many other players in our industry. So, we are charting our own way, and at the same time, I think we are bringing a customer into the field of sportswear that has not been a customer of that industry before.
You are also working with a customer who is maybe a little bit more fluent against the pricing changes. The product is there, the desire is there, the innovation is there, and we believe that this is the reason why, basically, demand has not slowed down despite the price increases that we did.
Q. How is the company positioned for the holiday season this year?
We believe we are well-positioned. So, we go into the holiday season like we did in every other holiday season in the past. We will not drive sales through discounting; we will drive sales through full price and just being relevant for the customer. In China, we have just finished the Double 11, a similar season where we are staying at full price, and we have seen a 250% increase in traffic on Tmall.
I think we had a good start to October and November, and we’re looking forward to the holiday season. But again, commitment is absolutely clear. If you look into the third quarter, we actually decreased the share of discounted items or last season’s products, and still achieved this amazing quarter.
Q. Is On Holding discounting for the holidays?
I believe we always have a corporate strategy and philosophy that does not discount in-line products, and I think this is what we are following. This is also the agreement we have with our partners and wholesale partners.
I think the demand is there, and so everyone is interested in helping us to build the brand that we want to be, because it’s also driving incremental customers to our wholesale partners.
Q. Have tariffs impacted inventory for this holiday season, and if so, how have you navigated the situation?
No, not at all. We also did not basically play around the supply chain. We didn’t try to optimize anything. We maintained the product flow, as planned, because I believe we have all learned from supply chain disruptions over the last two to three years, and it was not particularly versatile in the situation.
I believe we are now in a position where we can comfortably say, even with the tariffs, which will impact us slightly more over the next quarter, that we will still be far ahead of our long-term gross profit expectation.
Q. How is the demand for On Holding’s core franchises?
Yeah, I think when I look at running, we have three key franchises there, which are the surfer, the monster, and the runner. And then we have one franchise that is basically the credibility franchise, which is the Cloudboom.
The Cloudmonster continues to be strong. Basically, in March, next year, or in spring, next year, both the Cloudrunner and the Cloudmonster will update, and it will be quite a meaningful update. So, there’s a lot of freshness in the pipeline.
Q. Any new store openings?
When it comes to store openings, we still execute our playbook to open approximately 20 to 25 stores every year. And I think we had some absolutely amazing openings this year, but this will not slow down next year.
I think that if you look into next year, we have cities like Sydney and San Francisco included. Retail is very important to us, mainly because of the growth we want to achieve with our apparel. I think those two strategies are so closely linked, because apparel needs On retail to be physically represented, and then On retail is just the best place to show that. So, expanding our retail network, we will automatically increase the share of apparel.
Q. For the rest of the year, how do you see the macro situation playing out?
I think our read on what we see currently for the first five to six weeks of the quarter, as well as the outlook we’re having, is very confident. This is why we lifted the guidance for the year, and I think we also gave a strong signal about where we see next year. I think that the macro environment is there, but if you have a desirable product, then you can do a lot.
Editor’s Note: The interview has been edited slightly for readability and grammar.<
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