\n\tIn an interview with WWD, Martin Hoffmann, who was elevated to sole chief executive officer and chief financial officer last month, confirmed reports that the company is working with Zendaya, an ambassador for the brand since June of 2024<\/a>, on designing apparel<\/a>. Without providing too many details, he said the actress is \u201ccurrently working with us on the collection. We have new apparel coming in September with elements from her.\u201d<\/p>\n \n\tEarlier this month, Zendaya and her longtime stylist, Law Roach, unveiled her first co-created shoe<\/a> for the brand, the Cloudzone Moon<\/a>. On also works with the artist and dancer FKA Twigs who serves as a creative partner and face of its training collection.<\/p>\n \n\t\u201cWe\u2019re doubling down on some of the most exciting collections, like the one that we have done with FKA Twigs in our training category and the whole lifestyle apparel in collaboration with Zendaya<\/a>,\u201d Hoffmann said during the company\u2019s Tuesday morning earnings call.\u00a0<\/p>\n \n\tHoffmann said apparel continues to be a major growth opportunity for On. Although it still represents only around 7 to 8 percent of sales, the goal in the short term is to have that figure hit 10 percent. \u201cRetail is very instrumental in growing apparel,\u201d he said, adding that the company\u2019s stores generally have apparel sales \u201cwell above\u201d the 10 percent mark.<\/p>\n \n\t\u201cWe\u2019re particularly encouraged by the deepening consumer engagement in this category,\u201d Hoffmann added. \u201cWe are seeing a healthy year-over-year increase in repeat transactions. And importantly, all the first- and second-time buyers are increasingly adding apparel to their basket. This is a key indicator of our success in building a full sportswear brand and driving apparel adoption earlier in the customer journey.\u201d<\/p>\n \n\tIn a call with analysts Tuesday morning, David Allemann, cofounder and executive co-chairman, said: \u201cOur vision goes far beyond footwear. Our apparel business is expanding very fast and with it, our relevance as a full sportswear brand. We recently previewed our spring\/summer \u201926 collection during Paris Fashion Week and launched new apparel with a deal which will further elevate awareness.\u201d <\/p>\n \n\tHe also cited the capsule with FKA Twigs as a winner, calling it \u201chighly technical but with a unique aesthetic.\u201d<\/p>\n \n\tCiting the \u201ccultural shift towards sport as the new uniform,\u201d this means On is now also a lifestyle brand which \u201cunlocks a much larger addressable market,\u201d Allemann said. And he stressed: \u201cDon\u2019t expect us to swim in a sea of sameness. We\u2019re going to do it highly elevated as a premium brand, and very distinctively.\u201d<\/p>\n \n\tIn reporting its earnings early Tuesday morning, the Zurich-based sports brand said sales blew past expectations, hitting 749.2 million Swiss francs and topping analysts\u2019 projections of a 24 percent increase to 704 million Swiss francs.<\/p>\n \n\tHowever, the strengthening of the Swiss franc against the dollar took a bite out of the bottom line, leading to a net loss of 40.9 million Swiss francs and adjusted diluted earnings per share of 0.09 Swiss francs, well below the 0.21 Swiss francs in earnings Wall Street had been anticipated, according to Yahoo Finance. The foreign exchange issue is expected to continue into the second half, they said.<\/p>\n \n\tHoffmann stressed this was merely an accounting issue and \u201chas nothing to do with our financial strength.\u201d<\/p>\n \n\tDirect-to-consumer continues to be a driver for On. In the second quarter, net sales grew 47.2 percent to 308.3 million Swiss francs. DTC now represents 41.1 percent of the company\u2019s overall business.<\/p>\n \n\tThe company currently operates 54 stores around the world and Hoffmann said recent flagship openings in Chengdu, China; and Singapore have exceeded expectations, with the Singapore store\u2019s opening weekend the strongest of any of its previous stores. As a result, the company expects to add another five or six stores this year, four in the U.S. including one in Palo Alto, Calif., one in Mexico City, two in Seoul and \u201ca big one\u201d in On\u2019s hometown of Zurich, Hoffmann said.<\/p>\n \n\tBut DTC is not the only growth area for the brand. Wholesale sales increased 23 percent to 441 million Swiss francs in the second quarter, the company said. On counts 11,000 wholesale accounts globally, ranging from large retailers to small local running shops.<\/p>\n \n\tBy region, net sales in Europe rose 42.9 percent to 197.8 million Swiss francs; the Middle East was up 16.8 percent to 432.3 million Swiss francs, and Africa rose 101.3 percent to 119.2 million Swiss francs. In the EMEA, sales rose 46.1 percent, while in the Americas, they increased 23.6 percent to 432.3 million Swiss francs, and Asia-Pacific jumped 110.9 percent to 119.2 million Swiss francs.<\/p>\n \n\tHoffmann said the growth in Europe is the company\u2019s largest gain over the past two years and its \u201cstrategic repositioning\u201d in that region \u201cis paying off.\u201d He also cited strength in the Americas<\/a>, where DTC growth was especially buoyant, as well as the heightened demand the company is experiencing in Asia-Pacific.<\/p>\n \n\t\u201cI\u2019m really proud of our team,\u201d Hoffmann said. \u201cHalfway into our three-year plan, the momentum for the brand continues to be extremely strong globally. The power of being a premium brand is paying off.\u201d He pointed in particular to the gross profit margin of 61.5 percent the company posted in the quarter, up from 59.9 percent in the prior-year period, as a highlight.<\/p>\n \n\tBy category, sales of shoes rose 29.9 percent to 704.9 million Swiss francs; apparel jumped 67.5 percent to 36.7 million Swiss francs, and accessories rose 113 percent to 7.7 million Swiss francs. \u201cApparel really contributed strongly to our growth,\u201d Hoffmann said. \u201cMore and more customers are starting their apparel<\/a> journey with us earlier.\u201d<\/p>\n \n\tTurning to tariffs, Hoffmann said that while the company is \u201cnot happy\u201d with the increases, \u201cit\u2019s good to have clarity.\u201d The bulk of On\u2019s production is in Vietnam, where tariffs <\/a>were just raised to 40 percent on transshipments. The company raised prices on July 1 and has yet to discuss \u201cmitigation efforts\u201d with its retail and factory partners, he said on the call. <\/p>\n \n\tHoffmann said that the company has historically paid tariffs of around 20 percent on imports to the U.S. and although this new round of taxes is not welcomed, On is strong enough to compensate for the increase in import charges and will continue to focus on providing innovation, an elevated customer experience and superior service,\u00a0he said.<\/p>\n \n\tAs a result, the company raised its full-year guidance, projecting that sales will now increase at least 31 percent to 2.91 billion Swiss francs, above previous guidance of 28 percent, and it is calling for EBITDA of 17 to 17.5 percent, up from the 16.5 to 17.5 percent estimated earlier.<\/p>\n \n\tAllemann summed it up this way: \u201cOur Q2 results leave no doubt: On is playing the long game. We achieved a remarkable 38.2 percent net sales growth on a constant currency basis, not by chasing trends, but by building a resilient brand for decades ahead. This quarter proves our strategy is working \u2014 from our diversified portfolio of iconic footwear franchises to our stellar growth in apparel and our global brand footprint. The future of On is taking shape right now, and the most exciting chapters are ahead of us.\u201d<\/p>\n \n\tHoffmann concluded: \u201cOur premium positioning is coming to life across every consumer touch point, with product innovation, storytelling and distribution all working together to elevate the brand further. We\u2019re also incredibly encouraged by the strong engagement and enthusiasm we\u2019re seeing from our retail partners, whose support adds to the momentum behind the brand. Our performance gives us strong conviction in the impact of our strategy and the opportunities ahead to build an even more distinctive and desirable global brand.\u201d<\/p>\n \n\tWall Street gave a thumbs-up to the company on Tuesday. Joseph Civello of Truist Securities maintained his \u201cbuy\u201d rating on the stock, citing the company\u2019s \u201cunderlying momentum\u201d despite a choppy macroeconomic climate.<\/p>\n \n\tCiting \u201cone of the best earnings prints in footwear we have seen recently given decelerating results among peers,\u201d John Kernan of TD Cowen also maintained his \u201cbuy\u201d recommendation. Ditto for Peter McGoldrick of Stifel who said he was \u201cencouraged by the multiyear runway\u201d for the company. And despite the currency headwinds, Tom Nikic of Needham & Co. raised his revenue guidance for the fiscal year. \u00a0<\/p>\n \t\tShop<\/a> Zendaya\u2019s On Footwear\t<\/p>\n \t\t\t<\/p>\n \t\t\t\t\t\t \t\t\t<\/a><\/p>\n \t\t\tOn Cloudzone Moon Shoe in Ivory\/Wolf\t<\/p>\n \t\t\t<\/p>\n \t\t\t\t\t\t \t\t\t<\/a><\/p>\n \t\t\tOn Cloudzone Moon Shoe in Black\/Dew\t<\/p>\n![\"On](\"https:\/\/wwd.com\/wp-content\/themes\/vip\/pmc-wwd-2021\/assets\/public\/lazyload-fallback.gif\")
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