Sportswear brand On misses quarterly sales view as demand weakens, shares plunge

On forecast full-year gross profit margin of at least 65%, up from its previous forecast of 64.5%, and widened its full-year net sales forecast range to between 3.47 billion Swiss francs and 3.56 billion francs on a constant-currency basis, compared with its prior target of about 3.51 billion francs.

However, Jefferies analyst Randal Konik warned that margin gains may not be sustainable as growth moderates and inventory levels remain high, adding that those trends could result in downward estimate revisions.

Shares of the Zurich-based company, which have fallen about 17% this year, were trading at $30.30 at a roughly two year low.

Overall, the company, founded in 2010 and known for its sneakers' distinctive hollow soles, posted net sales of 850.3 million Swiss francs ($1.05 billion) in the quarter ended June 30, missing analysts' estimate of 878.16 million francs.

For the three months ended June 30, the company reported adjusted profit per share of 0.35 francs, edging past analyst estimates of 0.34 francs per share.

($1 = 0.8101 Swiss francs)

Sales growth in the Americas, which accounts for more than half of On's revenue, slowed to 13% on a constant-currency basis from 17% in the previous quarter. By contrast, Asia-Pacific sales jumped 54.7%.

Executives said the company would not compromise its full-price selling strategy for higher volumes.

"We are not sprinting for short-term volume. We are deliberately engineering for the multi-decade value of a premium brand," co-CEO David Allemann said in the post-earnings call.