On Running concluded 2023 with a record revenue of 1.79 billion Swiss francs, significantly surpassing its targets thanks to international growth. Despite this success, a recent investigation raises questions about the company's business practices, revealing significant margins compared to the production costs of its products.
Targets were exceeded: Swiss sports shoe brand On Running (On) recorded a record year in 2023, posting revenue of 1.79 billion Swiss francs, surpassing forecasts and achieving an impressive growth of +46.6%. Net profit also saw a significant increase, rising from 90.6 million francs in the previous year to 112.4 million.
The past few years have been particularly fruitful for the company. Sales crossed the billion Swiss franc mark for the first time in 2022. The American market contributed significantly to this success, with demand surging by 52.2% to reach 1.16 billion, while the Asia-Pacific region recorded even more remarkable growth of +75.9%, peaking at 141.1 million. The EMEA region, which includes Europe, Africa, and the Middle East, also saw its revenue increase, reaching 488.7 million, a rise of 29.2%. The Swiss brand has successfully unveiled the second generation of Cloudmonster running shoes and anticipates even greater results for 2024. Revenue growth is expected to reach at least +30%, with overall sales expected to approach 2.25 billion Swiss francs.
The On brand has built its reputation on patented CloudTec cushioning technology and the use of lightweight and durable materials for running and trekking. However, a recent investigation by the Swiss magazine K-tipp has shed light on the company's significant margins compared to production costs in Vietnam. For example, the Cloudtilt model, a result of a partnership with the Loewe brand, sells for 445 Swiss francs, while the production cost in Vietnam is estimated at only 20.80 francs. The media claims that the company is among those that pay Vietnamese producers the least.
Bianca Pestalozzi, the company's Europe director, explained on Swiss media RTS: "The margin of an On product is a combination of innovation, marketing, distribution, and product logistics. In Switzerland, for example, we have a dedicated warehouse, which many competitors do not have and ensures delivery within 48 hours. All of this comes at a cost."
On the brand's website, all suppliers are clearly mentioned.
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