On Holding (ONON) 16 Aug 222022 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the On Holding AG Q2 2022 Results. [Operator Instructions]. I would now like to turn the conference over to Head of Investor Relations. Please go ahead, sir.

and Conference for Call morning, Second On's good Earnings Quarter and afternoon, thank joining you XXXX Good Webcast. Co-CEO, Co-CEO, With are me Hoffmann; and Executive call and Martin Co-Chairman, Co-Founder, today Caspar Coppetti; on Marc Maurer. the CFO

the through prepared lead looking to statements, Martin for call are the opening we part, the and which a For first forward will Caspar after Q&A session.

differ Securities may within events would like from Please risks federal These the cause that and implied meaning expressed such today's a also and to measures could call and Commission with our March on filed call subject that financial this materially. and the materially for could in contain to the remarks future certain beliefs and as further are forward-looking refer regarding made to will performance everyone certain EBITDA differ I uncertainties that contain remind begin, detailed these margin. actual XX-F securities of statements non-IFRS to we adjusted cause forward-looking to EBITDA today. and Exchange the our Before of statements Please discussion only financial statements forward-looking current adjusted note risks statements or during laws. that any results such reflect the expectations results actual XX

as presentation or will company the believes isolation remarks. measures IFRS. Martin non-IFRS IFRS. most information this for of is presented Caspar, the call substitute today's useful measures provide to considered in of prepared not financial With investors, turn in to information prepared accordance the for first the comparable release by to While to refer with in Please over for these followed with non-IFRS financial will that, for financial I information reconciliation the accordance intended a be the measures a

families and joining the warm spend friends. to that your I time summer some have over quality of to all hope today. A been with welcome us you you able

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will We continue through the we begin [indiscernible]. and and would the Q&A And questions. ignite Operator, with to Marc to up are spirit open your movement now to session I like Caspar, the ready human session. that, to

Instructions]. [Operator

The first Fernández question from the comes from Cristina line of Telsey.

I the on wanted there's the about into what promotions picking I of quarter. increasing year. if to the the is your that impact, across inventories any, in the a factoring Congratulations up ask industry the and nice half And marketplace. of view mean definitely outlook? conversation back inventory of

outlook your that So thinking about how are you context? in

And Thank also you for to everyone. the question. this is speaking Marc from my Hello side.

of we're the in see to factory understand And dynamics retailers on looking are also year. with at with we're to our key also from much closely. the partners very focused close this, sellout and trying contact production volumes the the half very are perspective might second very, how data a we're all discount the one, And market we that watching then we're way in So inventory moving. what and understand

growth. very important and our gaining what's of think for in see incremental I you we're in much not about and game us, as market the share QX can it's still numbers, very

and feel On. we order looking partners they in book is will the the strong with reconfirmed continue year, second their how by at the see And our are so this and momentum strong brands also that half of to

I production probably and and slowdown will also they there bit expectation positions less think, in some is little a -- is there momentum, side. a the some -- that higher general, brands have that probably on inventory the

slower, talk bit continues then where about progress of trends to demand North are back by And little over growth been that outperformer. to has year? Can a be region? half an how a expecting Perhaps Europe, the you you follow-up. America the

Yes.

So I similar half what think the in to to what second you're seeing expect of the we in happen the year. numbers is

We're very, looks DXC like on, using to very of more very which of outlook We a then for and Key we that is strong. Japan, a to accounts. stores us, we a continue China second also, so business door reopen U.S. see is very and how about the very, to year. for for this we're that versus we to some positive. having wholesale at into So that's our very thanks in come And U.K. probably strong. strong. once our back continues good very market has in in second was be parameters traffic tune to the DXC the very, And is book business how half strong order the we're the off-line seeing but the half -- the year, especially continue strong. quickly looking the The bit QX in with spoke Asia look warehouse shift in able be continued our also numbers. were reflected expansion and key are what's from Germany, of online And happy shopping, of also a to large we're going to

expect what think very can you much a you're numbers. seeing continuation of I these So in

question comes Suisse. line the of from Credit Michael next The Binetti from

you with half to have year, you're and points you are history fiscal back of X have unusual the occurred model I particular? happy you model much and don't year plus you second about of as in in the some XX% try improve half level we profitability XX% here -- this full maybe forward, a for on help includes in much margin I And see to consider is think tough third a in obviously EBITDA normal XXX airfreight just model, in were it. you orient the would to Could with on think XX a an for the normal going year here lot and the that consider I great of -- look points year? -- freight. the -- much to I baking basis Since business would level at that in to what very quarter macro us we of quarter guess, basis of of the And how XQ? those the thinking I'm Congrats would freight, macro. in a the XXX FX. is the components sorry, in of then How your how mentioned

the for thanks Michael, question.

to a on more Just this. bit light shed

airfreight in So already of first what about quarter. of than in half quarter, used the we we the used the -- second

invest franc. continue to that the expect which, quarter, the on situation then as the call, And the and relatively euro to our dollar francs to airfreight On the Cloudmonster normal that relatively a we expect we in EUR that we products supply from provide comes And in U.S. talk X third numbers, the to really number, going low Cloudrunner. Swiss we relatively that to now for Swiss we somewhere the really we ocean had the we and we for in improves into see also to about have we mentioned, you -- mainly ratio the to a freight had are of for headwind also dramatically. happened. quarter, So airfreight factory the fourth QX X really the outlined FX, sufficient supply order to strong closures that we weak around before seen what CHF some the then million already CHF and are million

-- XX think clearly, is EBITDA, the then be X in X the That the the So we our year, for new about on I on about points. XX.X% we case, CHF a bit million, to to bullish more target we of hire just are CHF cost growing are given compensate then the gross how that second that's the half which -- in the makes cautious, talked still conservative bit order a for we the -- significantly, million impact basis that if people. but doesn't maintain grow continues this profit base. more to those And on a We'll EBITDA of have some don't we don't year. bit additional reduced impacts hiring we anymore. full the We mean

unlocks and follow both hopefully side beyond And just to that back are moving the as biggest we the platform? normal assortment picture, coming that, the think a get -- on Cloud of you we'll bit see little footwear I here, look do beyond bigger and 'XX guess do you to what thinking out some the up what apparel

innovation translates to people, and And market. -- performance we're the That's question. delivering consumers for in why many innovation That's of a the has very to business brand, several into good are the comfort. mostly drawn for It's performance-driven. The On aspects.

running and and So actually in side and is also we're design XXXX, focus that's through these side. the going footwear all sustainability We deliver mostly big on fronts, both the on the year the on apparel. go very innovated as we very, side. into half And the to of second

really with up like have underfoot here. extremely demand the with runners. Monster the have success Cloudeasy learnings and which a some to products We incorporated the great gravitate experience happy on cushioning time new we for franchise launched complex but positive we're And where cater that of catching program continue. look Icon of feel has that from now creating We're comfortable, shoe with and on consumers the seeing Runner, tremendous the how a extremely less to. we're And success impact it the of a environment same a [indiscernible] course, has the very making actually at the

On we're to most running, footwear the apparel to that's transition related apparel down we're because where side, everything easily that's doubling consumers side. from seeing the on

So bras the been great addition. a have running

stretchable going distribution. on And As 'XX, CloudTec. first in a insulation XX next earlier, we're then top are items few into the we've pieces and we our products. some last a spring coming XX the And very call, for added it over light always the making innovate type, to the now I then perspective fall, on months. announced said We adding of own and have on the from a these more call

is evolution. that CloudTec which product coming a face, the called have an features We

to package. So provide us Cloud, different say I revolution that slimmer in might more the allows cushioning a a aesthetic a of

it's to list combination of are don't we're products long to these through things. significantly So a a I as market, go the contributing already our to basically want of takeaways key results. they bringing these but quality,

to our to and meaningful our profitability. and very they're So our growth revenues

from Morgan the comes Stanley. line from of Straton Alex question next The

as on your light I hiring in it's another -- outstanding guys. another congrats which rate, slowing of number quarter, macro, definitely a makes And well. Great. from we've the know and you, peers what heard of guys, uncertain sense said you're

in that cost-saving board And clarify, rest of wanted So expense then or a travel the levers can for should just profitability the mentioned, specific on other I pull lower areas? to be aside from the top cushion to across slowing what of year? kind On the will the you line flow

Alex, Martin again.

the we XXX members team to half So X,XXX. said as about in year, we hired by grew the team we first --

have in down also the similar high-growth that. this grown for than a but and environment, defensive, You we bit always little company good such to in slow half, a faster more where is we which number order to also second processes. drive would thing a a the And improve can efficiency become expect just bit is a in

will where we not really talk areas compromise on We the to customers.

happiness of holiday building So that's especially delivery, where expect, the will that around the size continue especially we U.S. the the season team in the in business to we

We building, are committed brand. to driving the in marketing, continue also investing in sports brand in really

we to the that currently in a to also in see. inventory demand continue invest position fulfill order be to We in

we the slow opportunity always in a to So react. in to all environment. we are that want to are elements of But don't in down the growth artificially area. cost Again, there levers cut

just more about for it's it's adding costs So about in not area. something away, us, any taking cautiously

helpful. then just And this headwinds. color and much the price super any are well of seems some you remind offset maybe follow-up. you've be great. results, taken a maybe Can way would year, year quick one consumer pushback. It of just seems what but as guys half for back as are have like the you the It like That's kind increases price also how us for if there the seen any not next plans Great. to

in what announced fully past. we execute on we the Yes,

our prices increased XX% by U.S., the we about XX. in the of Cloud, volume, USD our So mainly on have

Another in the XX% be QX second XX% to of will on in XX% the And volume price the year will Europe the half then of year. another of and about year. then next XX% increases next in affected see QX volume

think that expect a also So position prices for offset the higher on we in are of we to some good costs I the products. that purchase

planned. At for I And have the like have use the in think and we seeing where power price of looks spring increases that that where pricing those strong we price good we also same then use time, we markets how some we feel increases good selectively we have will year. picture a position next with now and markets. in we're pretty that continue a

of from line question Jim from Duffy next is Stifel. the The

June new market the of you strength impressive strong Very XQ congratulations wanted and highlighted. products. on to by asking I start the that about reception results,

June. composition volume DXC led that by by Was Can you of the of Some or it in to shipments? others have reported trends geography? slowing speak And driven increased wholesale strength? June your any was particular

mentioned the from, where I the -- it the history growth is strongest way if understand the basically understand and So that came we the June question the is about this of was about Martin month correctly. in basically, of what On months

QX geographical June number. in a DXC split. from It's very what think I the months again So in see to other and you is with not line much an the outlier

achieved the mean just similar with kind far, that have highest split. end, of in So the business. was level we so very a some the seasonality it I in have we And

month a historically important has month So and very been June a good On. to

that very is I a and month think important July big. is not

role. And so is think this also bit where I a seasonality a plays

the ask DXC how versus customer perhaps the some I file? that Can about you in context the also growth? purchasers, Can customers between growth about of repeat new given speak splits DXC

Yes, thank you.

business. when look at I of the new very closely customers. it's we're mean, So exact But we're and to us very, because sharing customers you health not it important the the on details repeat watching

for like a like more Switzerland market add the look market example. we -- added And more Germany, so which a at customers we experienced the very, mature definitely you has in so like new would very growth, strong U.S., when or than some

focusing bring as provide -- think and On months one that how we're us a in so can area important which environment them very very and back for come the the to we well to very, that much years is I them in our environment. brand keep basically very good or consumers be we will can

working the paid spoke And metrics we're And acquisition, is to years on going over a something using. think to dependency is expect the and that about which months come. our we're that to this reduce also -- then we So be we be on. consistently I focus

is retention important. said, as So

important. categories. conversion brand at versus this how we're New customer is acquisition And is important. is looking And also

own closely our very we're on on brands consumer continues Google in all offline how evolving some be strong, is and So very, versus the online continue very, conversion is we're positive there, category we looking be data that at different very very really how and brand that rates the the having. all evolving parameters segments see to to and

is Jonathan the line Baird. The from of Komp from next question

or you drivers mentioned discuss some the of other distribution just the to to made believe see able have Yes. I I'm you the I of have. you whether some you as about ask that exceed e-commerce approach, the opportunity coming wondering revenue comment Martin, maybe the you to ambition the levers drive if know is that which I guidance, see I can typical that up, still you full know just -- levers the any revenue want growth, it's you be forward. going but site to year

to do so. happy Jon,

accounts we opportunities that grow, we the at above, it that expansion key then and also the if look be clearly our guidance at then sell-through the think continuous in or the have levers. new have I which to increase a a QX, in launching CloudGo, driver key like and high-volume products early spoke us we to is We model. are of work gives started that with lot is the about another with

that define some [indiscernible] we just currently see, go data We or our the growth. of growing important of on business But can basis. success continue track there The element bit explained, U.S., is to a of an that the are a very just always in stronger So weaker. strongly. in annual course, the will the as Marc DXC of on season holiday

for then the that especially first so growth the year in from the was seen quarter, year. with second of basically And into have the year-to-date shift compared half If you had growth, like-for-like a season quarter uplift course, last also element, growth of since first in the -- put the -- September. is perspective IPO the and be not half important growth strong just we year where to the is to U.S., outlook we first our why one then below the

on So a rates there more growth and, run the underlying the are October. as U.S. of bit also business on -- cautious year-over-year effect therefore, the into we a of

perspective But all same at together is growth. of look durable that from feel and this not to we it's are have. really there's a the plan so also those And term chasing a long time, opportunity at why elements term, we plan of to lot long and for necessary the

ready said, long-term as thinking things we benefit the So will the it's not to demand it of in be we artificially chase will capture are with I if there, that not the the of but brand.

Yes, that's product really questions. I encouraging. And X follow-up had if Caspar, I could, then

the you've any the And just forward? Roger, that or any from seen around First we the on longer-term economics as time? out it expectations of profitability model behavior from the any or that then should on Cyclon, over expect secondly, franchise update on and the going that you plans learnings consumers prove

in consumer it's literally. to terms I Cyclon, Thanks, Jon. tell On of early mean, too behavior,

the people that -- and a of forward. We is this going have shoe. everyone. very But churn it's like the curve We're learning received product. going management the encouraging the just is be game to What's retention to

within look we introducing We footwear about DXC the apparel. these very Roger. additional on reaction, So we're us. thanks program at feel benefit then, for the And for we franchise thinking way a definitely the are were next first business. so, also overall on years to also going important that the question within and by both months Obviously, XX or are positively -- the and encouraged areas Cyclon that the models our XX

But market fall. kind some model. things as other part minute. to actually, this on last flashback then very edition of lines retail in the stay much, the introduce can't the a cool and With going open Roger of to along it's I Roger a a And U.S. secret these key this of to are but going stores. exciting came look-back hit launch need coming we're too potentially, going very be until with resulting to with early say up updates, up, career outside well the his mid-top model, limited

people through, can hopefully, go anywhere So that stylish nice fall world. the in a

The Sole the UBS. Jay of question is from line next from

us Foot update Caspar, can picture. globally, and go doors bigger a a if you wholesale on think just give you of Maybe newer last much Locker Martin, of wholesale it's can how year an sort some has give us can sort the where the give how of idea XQ the count grown door over you in been. of idea performance like an us in it

end the year X,XXX X half doors. by count door Our is of

with a So roughly X,XXX accessories. of -- similar X,XXX and over little stores, for quarter, in basically bit apparel these is 'XX doors. We ended end of a

the that's So growth.

lot also is second just from growth with you're not expect we and of for coming again, growth same-store actually our and us. door On aware and a that about to adding in-store Locker opened opened this. from expansion sports, of door, which from then growth mainly half So QX. of is spoke is house lands, Foot not important in But already the already year. from expansion. and well the that to some very a seeing the we growth very, underway. the accounts, With you're public with continue the increase And We will come DICK'S key slight

happy. their watching with consumers all On we'll and And accounts, A product. we're grow happy we're best getting continue that we're X doors, We're sell-through. well underway, with Our to Tier them in is expansion with JD the very in with and closely extremely

we that of feet, win the runners On gate very, us. doors want the we You extremely to to out know very we that that DICK'S why to opened. is -- in want And run important that's strong was On On and

continue to key more year. the towards bit accounts of in see shift So the half of definitely, also a we'll little second

the Tom from Nikic Securities. is Wedbush The next question line of from

wanted I to ask about just the margins. gross

think ago, when of year? the gross should we year, that excluding half freight? look have said that you've reported way close But about margins and you some QX margins the X about XX%. And headwinds. when of gross months half margin, little back would highlighted FX in I higher QX the think you the excluding gross being in you're should we I of back we bit to know also airfreight, your Is year-over-year at the think been

Yes.

the exclude you if again go the we towards -- to airfreight, the So reconfirmed basically the ability and XX%.

Now And of for you FX. excluded we second in well had But therefore, would be the XX%. impact to a the in this from also as exactly half it's say. QX, order the negative exceed year, as

top. So QX depends but Traditionally, XX% be is from comes can in sales and to due we expect strong -- the the DXC the impact the QX, DXC not really holiday a of to we that wholesale out the seeing QX. bit will seeing be airfreight could be to that consider on and share stronger baseline of campaign, then even on in

Understood. Congratulations on all the business. in momentum the

line is Poser from question next Williams the Trading. The Sam from of

be points of Can XXX about basis offsets headwinds mentioned you what in gross you it us to a margin XX gross us of the give and expect wanted for where by the -- to margins I what know -- on give line the basis to simple. you make points QX you can QX. better the around quarter? in -- what sort Just

year don't and the both from the We said. More expecting as also airfreight. indicative well what expectation. absolute the I long-term we FX give a I the commentary headwind mentioned on against guidance to And profit. impact is as Basically, there last that just are gross bit the higher

after expect other one just question confirming, you was -- But I would and I this. have

in a in that's You And it margin perspective, QX is you [indiscernible]. gross said. what higher from from expect QX to than from I gather more mix be

QX Cloudmonster. be and from on have we using And for X as those expectations that spending million excessive airfreight the Yes. will fact CHF million based we to outlined for current Cloudrunner with not X additional CHF

And on you've Okay. been mentioned a as give key number you at accounts key Great. Can indication of who mentioning regard us you accounts this you time? -- times. some then

account the is, and about also it's segment. how about an the about In growth in of global a the specific It's the account. potential in consumer account the you. end, significance size Thank as

running question, important again, to a and partner an very to answer it's you difficult feet to the So we at we for us. would U.S., On account have but with an would core segment, if very, this like in our look bit fleet example, have amazing

working account And the years, very, then about outdoor performance If been day on look more good spoke the very spoke us. space, side, and for with REI you AD, in many for about we've they're Footlocker. all we we and more

for are some of those And you count examples this think we they're key accounts. all as multidoor that different it's accounts, what And I So key have geographies. basically is and would clear accounts. that

door single will be a account. account a So never key

you Are accounts the in are smaller smaller accounts? are lastly, if -- within you key the doors -- to inventory the like you more how the the then having you're you're you you So also number I allocating these with that the product? maintain that does become in, impact are expansion as able of accounts, -- aggressive levels with key accounts, which like may,

Yes.

about it's we always when consumer. So product at look allocation,

the allocate so best runner And and community product. to core that to where does the how is speaking would the the is, runner, caters that question to and this we core or shop the core if you're product what's a runner,

accounts, So have the highest outdoor whether level if they or then hiking you're of key best independent priority. are partners, small into of accounts a would shoe, and independent our looking

at Feet. the latest a at then, the partners looking working that all product again, a you're we're like at look Fleet for should much account And stores, running, we but JD if we priority that our that our our then website you own much is look And more you all we're you're that with all day might runner If DXC specialty our product, all you DXC well. and running with, we very specialized in accounts access very if and, to they a own basically are therefore, categories or accounts there your use, -- would also want to that own all or being communities cater have products only respective and different because feel targeting find Locker prioritized. as Foot highest channel a in the gets the

final of comes the question Piper line Zvejnieks Abbie from The Sandler. from

you're in then specialty brands is your secondly, channel? America consumer how have do you think you North share from And with in reaching is products Cloudmonster? differ run? you guess run think And an that the that like on does market you update And new Do versus which can this who Europe? on in specialty I On gaining comment maybe share or styles which then

Abbie. Thanks,

there's and out be able may with So And really reaching not with the models, cushion. Cloudmonster we're underfoot didn't some the to light. to for these and to segment. of run shape. comfort success fitness. They stay I the XX, run now past because harder. that There too models tell almost out they're maybe unparalleled becomes Cloudrunner same these very go this with maybe X a market that left older around themselves [indiscernible] average protection by that that you is part share. run your to we're market seeing success and target Maybe X over people this provide in that very, And but just wouldn't enough myself and these consider little they runners in well. bit America, now we've a group we're product of of them running the we're also North in explained Marc offer where on of as U.S. And lot to And able kind a

definitely own X market Germany looking are seeing as amongst of highest think we're distribution, density. most specialty in the brands. for we growth growth or key at where run same-store we're this comes And highest in the still of the the markets specialty in doors that doors, So in already is because [indiscernible] when share, many I XX%. our such top the from all area we is above have U.S., example, rate a And

So we share. continue to gain

We book will grow continue some the very that growing than consumers to product positive and of order looking spoke the benefit much channel also were is at continue stronger that. from we looking innovations that the to to, Caspar already and at

this conference your telephone. a pleasant disconnect and the concludes have Thank day. The Q&A may Ladies for and joining, concluded, and you you gentlemen, now has session. Goodbye.