On Holding (ONON) shares fell more than 2% Tuesday after the footwear company delivered guidance for the fiscal 2024 and reported second-quarter results. The stock initially fell nearly 10% in premarket trading but clawed back some of the losses after the opening bell.
For the fiscal Q2 2024, On reported earnings per share (EPS) of CHF 0.14, with revenue totaling CHF 567.7 million, slightly above the consensus estimate of CHF 562.7 million.
Adjusted EBITDA for the quarter reached CHF 90.8 million, marking a 45% year-over-year increase and surpassing the estimated CHF 85.9 million.
The company’s direct-to-consumer net sales came in at CHF 209.4 million, below the anticipated CHF 222.2 million. However, wholesale net sales outperformed expectations, reaching CHF 358.2 million compared to the estimate of CHF 339 million.
On Holding’s gross margin for the quarter was 59.9%, slightly under the forecasted 60.1%.
For the full year, On maintained its full-year guidance of at least 30% net sales growth on a constant currency basis. This implies 2024 sales "of at least CHF 2.26 billion," which translates to ~$2.61 billion based on today's exchange rate. The Street was looking for $2.66 billion in annual sales.
The company also expects to achieve a gross profit margin of around 60% for the full year.
Moreover, On projects an adjusted EBITDA margin of 16% to 16.5%, aligning closely with the estimated 16.3%.
According to analysts at Bernstein, expectations were for ONON to raise its guidance rather than reiterate it, "which is what the stock seems to be reacting to this morning, with concerns around Q3 delivery issues as well as FX impact in back half."
The guidance implies $1.18 net sales for the second half of 2024, 4% below consensus estimates, analysts note.
Analysts at Stifel voiced shared remarks, though they maintain a bullish stance on ONON's long-term prospects.
"The softer CHF guide will be a source of contention for those accustomed to beat and raise," they said.
"We expect shares under pressure this morning but remain compelled by growth opportunities supported by expanding market opportunity and innovation competence."