Why On Running Could Be Worth $6 Billion | This Week in Fashion, BoF Professional

On Running, a global sneaker brand, had to overcome many obstacles after it launched in 2010. It had to attract customers beyond its hometown of Zurich. This small city is not known for being a sneaker capital. It also had to convince customers that its strange-looking footwear, featuring a midsole of segmented tube tubes, was better than products from established running brands such as Brooks and Asics, and giants like Nike and Adidas.

It’s done both. Today, On has more than 60 million fans and sells in more that 8100 stores around the globe. In a regulatory filing, On revealed that it is planning to launch an IPO on New York Stock Exchange. It expects to raise $622 million and valued it at more $6 billion. To put that figure in perspective, Adidas just sold Reebok — a faded but still widely recognised and valuable name — for $2.5 billion.

On is a growing upstart in the sneaker market and one of those who are being fueled by a pandemic surge in running. Its global sales in 2020 were 425.3 million Swiss Francs (about $464 millions), an increase of 59 percent over the previous year. Already 315.5 million Swiss Francs were sold in the first six months of 2021. It also made a net profit of 3.8 millions Swiss Francs, after a loss in total sales of 27.5 million Swissfrancs for 2020. Comparatively, Allbirds, another big sneaker company, reported a loss in the first half this year of $21.1 million.

The key to On’s success, it says, is the unique feel of its sole. “It’s all based on one radical idea,”The company has posted the information on its website and in its filing. “Soft landings followed by explosive take-offs. Or, as we call it, running on clouds.”

It started as a shoe for runners. However, its trajectory has shown it expanding beyond that market to become a larger lifestyle brand. It’s a lucrative path, if On can get it right. Nike and Adidas, for instance, started by focusing on athletes. On is now a brand that sells shoes for everyday wear. It also has a line for tennis shoes featuring Roger Federer, a Swiss tennis star who invested in the company in 2019. Federer is a prominent face for the brand. On may eventually surpass its running competitors if it can successfully transition.

“On makes a great product that runners really like,”Matt Powell, an analyst in the sports industry at NPD Group, says so. But they aren’t the only ones buying its shoes these days, he notes. The distinctive design is helping them catch on as casual footwear, a market that’s much larger than performance sneakers, Powell says.

These shoppers are key to On’s growth plans. “We started with the run specialty channel and then selectively expanded to additional premium retail partners to reach a broader audience,”According to the filing. The company is already selling at a number upscale retailers like Ssense, Dover Street Market and MatchesFashion and intends to continue adding more partners on both the premium and general end of the market as well as reaching out to new customers.

It’s also growing in other ways, beefing up its direct-to-consumer channels, for instance, which currently make up about 37 percent of On’s sales. It’s further developing its e-commerce operations, as well as opening physical stores. It opened its first brick and mortar location in New York at the end of last fiscal year.

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North America, in fact, has become On’s largest market since it entered the US in 2013. It’s another strength for the company. The US is the world’s largest market for sports footwear, including performance, outdoor, and “sports-inspired”Euromonitor projects that shoes will reach $36 billion. Just over half On’s global sales came from North America in the six months through June 30.

On’s signature cushioning was the work of co-founder Olivier Bernhard, a former duathlon and Ironman champion. He wanted cushioning in the heel for landings and a firm feel at its front for pushing off into the next stride. He tried cutting up a garden hose and attaching it to the bottom of an already existing shoe. Bernhard and two friends — David Allemann and Caspar Coppetti, On’s other co-founders — took the idea to an engineer and refined it into what On calls CloudTec. It’s the basis for On’s Cloud sneaker, a popular model that runs about $130.

Innovation has remained central to On’s brand since, helping it gain trust among its core audience of runners and athletes. It has sought out partners such as the Swiss Federal Institute of Technology in order to develop new products. It has introduced products for speed and trail running, as well as cushioning. It also makes clothing, though it’s the original running platform that remains the core of the company.

There are many challenges ahead. All footwear On this year was produced by 13 suppliers in Vietnam. Vietnam’s factories are currently being affected by Covid epidemics and local freight operations have halted. It’s unclear when these disruptions will ease. On expects them will affect its operations for the remainder of 2021 and into 2020, although it has experienced only temporary disruptions as a result of Covid.

To mitigate future risks, the company will still start manufacturing shoes, clothes and accessories at eight new suppliers in Vietnam and Lithuania. It also needs this capacity to provide enough sneakers for the increasing number of customers who are looking to purchase them.



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Everlane leaves China market. The US retailer will follow in Urban Outfitters’ footsteps and close its Tmall Global store on Sept. 12, citing the Covid-19 pandemic and an adjustment in global strategy as contributing factors.


Mexico is the first country in North America to ban animal testing for cosmetics. Shutterstock.

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Nensi Dojaka (right) at the LVMH Prize event alongside a model sporting her Autumn/Winter 2021 collection. LVMH.

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Eugénie Trochu, Vogue Paris' new head of editorial content (left). Adeline Mai. Francesca Ragazzi, Vogue Italia head of editorial content (right). Courtesy.

Eugénie Trochu, Vogue Paris’ new head of editorial content (left). Adeline Mai. Francesca Ragazzi (right), head of editorial content at Vogue Italia. Courtesy.

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Joan Kennedy compiles this list.

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