Premium Sneaker Brand On’s Stock Tumbles Amid Push to Keep ‘Full Price’ Power
The Swiss company’s stock ended the day down roughly 20% after it lowered its outlook for the rest of the year.
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There’s no cushioning the blow here. Not even the most lightweight, stylish sneakers could stop On Holding from taking a tumble Tuesday.
The Swiss company’s stock dropped roughly 20% after it reported second-quarter net sales of 850.3 million Swiss francs ($1.05 billion), significantly below the 881.4 million analysts had been expecting, and lowered its outlook for the rest of the year. The athletic shoe firm backed by tennis star Roger Federer now expects sales growth this year in the “low 20% range” instead of the minimum of 23% it forecasted previously.
Double Fault?
On is known for its premium sneakers and has consistently raised prices, with most of its newer shoes selling for at least $160. In a call with analysts following On’s latest earnings, company leaders said the brand had again chosen not to compromise on its “full-price integrity.” Loyal customers and new cohorts aren’t necessarily coming to the premium brand for its price, Caspar Coppetti, co-founder and co-CEO, told analysts. “They’re looking for innovation,” he added. “They’re looking for cultural relevance.”
It’s a different move from what many other retailers are doing to attract consumers who are weary of inflation and hunting for deals:
- The latest data from Ipsos Consumer Tracker shows that 61% of US adults say they’re only spending on daily necessities now, up five percentage points since November.
- In May, Goldman Sachs researchers said that some consumer-facing companies are responding to the high prices that are hurting shoppers’ wallets by “bringing forward cost-saving plans and cheaper product alternatives.” Walmart, for instance, cut the prices of thousands of products last month, including beef, cherries and soda.
Advantage, Not Federer: There’s a certain Grand Slam winner who may not be too happy about the impact On’s stubborn pricing is having on its outlook. After the company’s stock slipped in pre-market trading, MarketWatch reported that the value of Federer’s holdings fell by about $50 million. He can keep those eight Wimbledon trophies but will have to say goodbye to his billionaire status for now.
