Why On Is Soaring In North America as Other Brands Struggle
On Holding just became one of the few shoe brands to post positive results in North America this quarter.
The popular Swiss running shoe brand grew 66.8 percent in North America in Q2. Net sales in EMEA, Asia-Pacific and the Americas more broadly increased in the double digits as well.
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“We are pleased by On’s continued strength across the Americas where momentum in run specialty and new accounts appear strong,” wrote Baird analyst Jonathan Komp in a note to investors.
With these results, On has become an outlier among several other footwear brands that experienced significant declines in the region this quarter amid inventory excesses and a conservative wholesale environment. In the last few weeks, Adidas, Steve Madden, Skechers, Deckers, Puma and Columbia Sportswear have all lamented the challenges in the U.S. market.
On, however, lauded its strong partnerships with wholesale retailers and even announced plans to expand into more doors as it also strategically closes some doors. Through 2023, On said it is planning to add 50 more Foot Locker stores and 15 JD Sports/Finish Line doors, mainly in the U.S. On said it was the fastest growing brand at Fleet Feet (with the highest average selling price) and was named Vendor Partner of the Year from REI. Overall, On said its top five key account partners in the U.S. grew a combined 92 percent in the first half of the year, excluding new business with Dick’s Sporting Goods.
“We are seeing from our key accounts and wholesale partners a very strong sell through at full price,” said Britt Olsen, On’s GM of Americas and head of global commercial strategy, in an interview with FN. She added that reorder rates are returning to previously forecasted levels in the U.S.
When it comes to choosing a wholesale partner, Olsen said On looks for stores that can speak to performance running fans or another one of its communities. By channel, global DTC net sales grew 54.7 percent in Q2 driven by strong demand from the consumer. This outgrew the global wholesale channel’s 51 percent growth.
According to Olsen, On’s North American strength can be attributed to its investments in product, brand experiences and elite athletes. On delivered six new performance shoes in just 24 months, which has helped it grab market share in the running channel. Some top performers are the Cloudmonster, the Cloudrunner, the Cloudsurfer and the Cloudboom Echo 3, a long-distance running shoe that launched more broadly in Q2.
“On is a brand that has always over-invested in innovation,” Olsen said. “I think the product is really speaking for itself.”
On has also invested in its On Athletics Club, a full-time training facility in Boulder, Colo. and has broadened its roster of professional athletes, which includes Boston Marathon winner Hellen Obiri and tennis star Ben Shelton. On’s goal is to bridge these professionals with community sporting events and local athletes to create meaning experiences, whether via its own Track Night events or sponsoring a track meet like Penn Relays.
“What’s always important is how can we take these really inspirational and influential athlete experiences that bring them down to a community level,” Olsen said.
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