Roger Federer-Backed On Holding Raises Over $600 Million in IPO

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For On cofounder David Allemann, Wednesday was a good day for a run. But rather than his usual route, he led a team of executives and local ambassadors to the New York Stock Exchange, where the Swiss running brand rang the opening bell in celebration of its initial public offering.

Late Tuesday, On Holding AG sold 31.1 million shares at $24 each, higher than the $20 to $22 that had been expected, raising over $600 million to fuel its growth. Investors were eager to snap up the shares, driving the price up nearly 46 percent to $35 a share. The company, which is trading under the symbol ONON, has over 271 million Class A shares, valued at $9.5 billion in total, as well as 345 million Class B voting rights shares.

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Despite the windfall, Allemann said On is not planning any dramatic changes in its business strategy, but instead hopes to continue on a trajectory that finds its product in 8,100 retail stores in more than 50 countries since it was founded 11 years ago. Sales in the first six months of this year jumped 84.6 percent to 315.5 million Swiss francs, or $344 million, from 171 million Swiss francs, or $187 million, a year earlier, the company said. It also reported net income of 3.8 million Swiss francs ($4.1 million), compared to a loss of 33.1 million Swiss francs ($36.2 million) a year prior.

“From the very start,” he said, “the brand has consistently challenged the status quo. We always ask how can we do things differently, and that led us to become one of the fastest-growing sports brands,” Allemann said. North America is On’s largest market, representing 49 percent of sales, followed by Europe at 44 percent.

Allemann said he’s not concerned about the scrutiny he now faces as a public company and said On will “continue to be an independent company and innovate to grow. It’s not about Wall Street watching us. This is not a finish line, it’s a new starting line.”

He said the goal is to “be a premium performance sports brand that grows beyond running to embrace an active lifestyle. That’s the need of the next generation.”

According to its letter to potential investors, “We will continue to make make calculated, courageous moves when venturing into the unknown, whether that is with new territories, new products, new materials, new business models or new consumers.

On was founded in 2010 by former professional triathlete Olivier Bernhard, who approached his friends Allemann and Caspar Coppetti about reengineering a running shoe to create a different sort of running sensation. The concept he was seeking was a cushioned landing and explosive take-off, or what they describe as “running on clouds.” It created a cushioning technology called CloudTec.

Since that time, the brand, which is the top-selling running shoe brand in Switzerland, has expanded beyond strict performance running product into what Allemann described as “perform all day or lifestyle” product, as well as fitness, trail running and tennis, thanks to its association with Roger Federer.

Federer became an investor in the brand last fall and is involved in product development, marketing and fan experiences. He is also a representative for the brand.

“So we don’t have to attack in new areas,” he said. “We just need to continue to innovate.”

The funds raised by the IPO will allow On to expand its geographical reach, open more retail stores and continue to enhance its sustainability efforts, he said.

“We’re already in 60 markets and the IPO will help us double down on that.” The company has identified China as its fastest-growing region.

The On management team and ambassadors ran to the NYSE to ring the opening bell.
The On management team and ambassadors ran to the NYSE to ring the opening bell.

Direct-to-consumer accounts for 38 percent of On’s sales and at the end of last year, it opened its global flagship in New York, a 1,630-square-foot store at 363 Lafayette Street. “We want to do more brand stores,” Allemann said.

He said despite opening in the middle of the pandemic, the company is pleased with the performance of the SoHo store. Although tourist traffic is down, locals have embraced the store and there are often lines outside to get in. “We should have built it double the size,” he said.

He attributed that in part to “performance taking over fashion,” a trend that started a few years ago and accelerated during the pandemic. “Life is changing, and sport and business lives are merging. The new generation doesn’t have the patience to switch between uniforms.”

This demand can also give a boost to On’s apparel business, which it launched in 2016. “We were frustrated having to wear other brands and we felt we were missing unique essentials like the perfect running short or a lightweight jacket you can wear to hike a mountain or travel,” he said.

He wouldn’t bite when asked if On has its sights set on Nike and the other powerhouse sports brands, saying it will continue to carve out its own path and not be swayed by others.

But Allemann stressed that sustainability is perhaps the company’s largest goal. “We are a Swiss brand, we grew up in nature — that’s our home,” he said. “And saving the planet is the most pressing issue of our time.”

The company has a goal to enhance its sustainability and is committed to reducing CO2 emissions, and to design and produce more products using a circular approach. It has set a target that by 2024, all products will be made with recycled polyester and polyamide and 100 percent of cotton used will be organic.

It recently introduced Cyclon, which Allemann described as the first 100 percent recycled high-performance running shoe available only by subscription. When the shoes wear out, they are returned for a new pair and the old ones are ground down into materials that can be reused on the next pair.

“We will work on the materials and this new business model and invest part of the IPO funds to this,” he said.

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