What's Happening?
On Holdings is set to deepen its collaboration with Zendaya, who has been an ambassador for the brand since June 2024. The company plans to launch a new apparel collection designed in partnership with Zendaya, following the successful release of her co-created shoe, the Cloudzone Moon. This move comes as On Holdings reports a 32% increase in second-quarter sales, surpassing expectations with 749.2 million Swiss francs in revenue. Despite a net loss due to currency fluctuations, the brand's direct-to-consumer sales grew significantly, representing 41.1% of its business. The company is also expanding its retail presence globally, with new store openings planned in the U.S., Mexico City, Seoul, and Zurich.
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Why It's Important?
The collaboration with Zendaya is a strategic move to capitalize on her influence and expand On Holdings' apparel segment, which currently accounts for 7-8% of sales. The brand aims to increase this to 10%, leveraging retail channels to boost growth. The strong sales performance highlights On Holdings' resilience and ability to navigate economic challenges, such as increased tariffs on Vietnamese imports. The expansion of its global retail footprint and the focus on direct-to-consumer sales are crucial for sustaining growth and enhancing brand visibility. This development is significant for stakeholders, including investors and retail partners, as it underscores the brand's commitment to innovation and premium positioning.
What's Next?
On Holdings plans to continue its global expansion by opening additional stores, including four in the U.S. and others in key international markets. The company has raised its full-year sales guidance, projecting a 31% increase to 2.91 billion Swiss francs. It also anticipates higher EBITDA margins, reflecting confidence in its strategic direction. The collaboration with Zendaya is expected to drive further interest in the brand's apparel offerings, potentially attracting new customers and strengthening its market position. Stakeholders will be watching how these initiatives impact On Holdings' financial performance and brand equity in the coming quarters.
Beyond the Headlines
The partnership with Zendaya not only enhances On Holdings' product offerings but also aligns with broader industry trends of celebrity collaborations driving brand engagement. This strategy may influence other brands to pursue similar partnerships to boost visibility and sales. Additionally, the focus on direct-to-consumer sales reflects a shift in retail strategies, emphasizing personalized customer experiences and digital engagement. The company's ability to adapt to tariff changes and currency fluctuations demonstrates its operational resilience, which could set a precedent for other businesses facing similar challenges.
