6 Ways On Is Winning As It Prepares to Go Public

As it prepares for its big debut on the New York Stock Exchange, On is firing on all cylinders.

Today, On, which will trade under ONON, raised the projected price range for its IPO. Initially, its filing on Sept. 7 with the Securities and Exchange Commission listed the price range from $18 to $20. Today, a filing shows the increased range, which is now from $20 to $22.

Industry insiders are bullish on the brand, and believe now is the right time for On to go public.

“The stock market has been really good during the pandemic for the most part, and valuations have gone up. The running business is really good right now, and we’ve talked about the reasons behind this: healthy living, social distancing and so forth,” explained Matt Powell, senior sports industry adviser with The NPD Group Inc. “On’s business is really good here, so I think it’s a great environment for them to go public.”

Since launching in 2010, On has grown its global footprint significantly, now selling in roughly 8,100 stores across 60 countries, with North America as its biggest market, accounting for 49% of its sales.

For the six months ending June 30, the brand earned net sales of 315.5 million Swiss Francs, which converts to roughly $343.4 million. The number trumps the 170.9 million Swiss Francs ($186 million) from the same period in 2020, an 84.6% year-over-year jump.

Below, insiders discuss why On is winning.

Fashion Appeal

On Cloud
On Cloud.
CREDIT: Courtesy of On

Much has been said about the COVID-19 running boom, with people hitting the streets in droves — in performance shoes laced up to stay fit with gyms closed. Looking ahead, industry insiders believe this could have an impact fashion, and On would be in position to capitalize.

“We’re waiting to see if running shoes come back as streetwear, and one of the brands I think could lead us into that would be On,” Powell said. “Right now, the brand is already getting tremendous acceptance. I’m seeing shoes on the feet of people who clearly are not runners, but who are stylishly dressed. This could help them really bring that trend back of running shoes as streetwear, which we haven’t seen for almost nine years now.”

On’s retail partners have already seen the brand’s shoes become a local fashion staple. Jon Zalinski, owner of Colorado-based Treadz Shoes, said On has become part of the uniform of his consumers, pairing shoes from the brand with apparel from Lululemon and Vuori.

And he believes the fashion appeal will only grow stronger.

“I think there’s going to be a massive explosion with On and it will take over some leisure categories, like Vans skate shoes or the New Balance 574,” Zalinski said. “The casual sneaker market is huge and lifestyle sneakers, and On is going to jump all over that.”

At Montana-based  retailer Schnee’s, president Curt Smith said the On Cloud specifically has become a hit with his consumers, and has become a go-to style for those who are interested in slip-on looks.

“The two biggest slip-on shoes in the history of footwear we’ve sold are the Dansko Professional and the [Merrell] Jungle Moc. But nobody else has done it like On,” Smith said. “People have done the quick lace thing, but not like On, and they’ve done it with variety with the original Cloud. That’s where most of the color variety is. And now, people are collecting them. There are people who come in and they say, ‘Oh, I’ve got 10 pairs of these.'”

On’s momentum in fashion, according to Powell, could pay off for the long term.

“The future is very bright for this brand. It’s a great story because they really broke all of the rules that we’ve had about how you start of sneaker business — and it’s worked,” Powell said. “And they’ve made the leap between being a straight-up performance brand to being a fashion brand, and they’re taking a different approach than a typical performance brand would take, certainly.”

Conversation Starter

On isn’t new, but retailers have said its logo still creates conversation in store.

“What’s kind of funny is nobody knows what On is called. They look at the shoe and they’re like, ‘Is that QC? Is it QN?’ It creates conversation because people don’t don’t know what it is,” Smith explained.

And Schnee’s isn’t alone. Zalinski said this is a frequent occurrence at Treadz Shoes as well.

“They see it on someone’s foot, but there is a mystery behind the logo. People are like, ‘What is that?’ They just have to ask,” Zalinski said. “They don’t even know how to pronounce it. ‘Is it QR? What is that?’ How the logo is on the shoe just lends itself to conversation.”

Everyone Wants a Pair

Several retailers have said their sales of On lean toward women. But that doesn’t mean men aren’t fans of the brand, too.

For Zalinski, sales of On in Treadz Shoes lean three to one in favor of women. However, he explained the lone reason more women than men are buying On is simply because more women spend money in store than men.

On’s consumers at Schnee’s are similar, with both 20-year-old women looking for cute shoes to wear with Lululemon apparel and 80-year-old women interested in comfy shoes that look good buying looks from the brand. However, Smith admitted that he’s had experiences on the sales floor recently that have come as a surprise.

“We sell to way more women, but the great thing about On is I just had a guy the other day, I bet he was 70 years old, and he wanted the yellow shoe. I haven’t sold a yellow shoe to a 70-year-old guy my whole career,” Smith said. “The people want their color, they’re willing to buy this brand and step out with this brand.”

He continued, “Men in general are getting a little riskier with color, they’re starting to wear more color than they did 10, 20 years ago. But they don’t want a lot of color, they want a little color. That’s why the the subtle yellow, the subtle orange are better than a bright yellow, a bright orange like a track shoe that’s bold.”

Color Theory

On’s approach to color, its retail partners said, only add to the intrigue.

“They cycle their inventory very quick. One color might be here today, but it’s not there tomorrow,” Smith said. “But then there’s something else to replace it that’s new and fresh.”

He continued, “They’ve stuck to the basics all along — blacks and whites, gray and whites. But they throw in some color and have variety, and they encourage their retailers to have a wide variety.”

Zalinski said great use of color has also worked for other brands, and the strategy is only making On more successful in his store.

“On comes up with some funky colors, much like Arc’Teryx did when everyone was using primary like red, blue, yellow. They were like, ‘We’re going to make autumn rust,” Zalinski said. “On’s colors are really popular, and it has stepped the brand out a bit.”

Smith said the hues aren’t overbearing and off-putting, however. He cited the monochrome selections for the Cloud silhouette.

“Their yellows are a subtle, their orange is a subtle orange — it’s not orange, it’s a it’s a burnt orange. It’s not it’s just not pink, it’s dusty pink,” Smith said.

The Federer Factor

Roger Federer On
Roger Federer in the On headquarters.
CREDIT: Courtesy of On

Roger Federer brings attention to anything he is part of.

Previously backed by Nike, the tennis icon announced in November 2019 that he was investing in On. Since then, the beloved athlete’s involvement has been the subject of several headlines.

His impact, however, has been felt beyond the news both fans of him and On consume.

“Roger Federer is an investor and just helped design a whole bunch of shoes, and one of the shoes he wore in the last Wimbledon tournament was a pair of Ons that nobody can get,” Zalinski said. “Roger is creating this high-end aura right now, like if you’re cool, if you’re in the know, this shoe is rocking.”

Although consumers cannot buy the shoes Federer wears on the court, they can pick up pairs bearing his name.

Available now for men and women via On-running.com are a trio of classic, tennis-inspired looks. The first look On revealed is  The Roger Centre Court, which first hit retail in limited numbers in July 2020. Later, the brand would release two more looks: The Roger Advantage and the The Roger Clubhouse.

A Great Partner

With global supply chain issues, retailers throughout the country are having trouble keeping their stores stocked. What makes this uncertain landscape a bit more palatable is a great relationship with vendor partners.

Smith said the way On works with its retail partners is second to none.

“Any brand that succeeds in our store succeeds because of the service behind it — and their service is off the charts,” Smith said. “Their site works great, they deliver on time. They haven’t skipped a beat for us, they haven’t let us down. And they’ve got the logistics and the operations to support a scaling operation.”

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