On AG(ONON) ZACKS·2025-01-21 16:36Core Viewpoint - On Holding AG (ONON) is experiencing strong growth driven by its multi-channel strategy, particularly through its direct-to-consumer (DTC) channel, enhanced global brand awareness, and operational improvements [1][5]. Growth Drivers - The DTC channel has significantly outperformed the wholesale channel in 2024, with net sales increasing by 27.3% and 30.7% on a constant currency basis in the first nine months of 2024 [5]. - The DTC channel grew by 39% year over year and 43% on a constant currency basis, indicating strong brand momentum [5]. - The company achieved its highest gross profit margin since its IPO, reaching 60.6% in Q3 2024, an increase of 70 basis points year over year, primarily due to DTC growth and a focus on full-price sales [6]. - Strategic partnerships and a strong presence at events like the Paris Olympics have enhanced brand recognition, contributing to market share growth [7]. - New store openings in key locations, including New York City, Austin, Chicago, Milan, and Melbourne, have expanded the company's retail presence [8][9]. Challenges - The sportswear market is highly competitive, with established leaders dominating market share, posing challenges for ONON in gaining significant long-term market share [10]. - The company's marketing expenses increased by 33.6% year over year in the first nine months of 2024, raising concerns about the sustainability of sales growth from heavy marketing investments [11].