Yahoo Finance Live anchors discuss the rise of On Holding shares on Q4 earnings, inventory, and more.
Video Transcript
JOSH SCHAFER: Consumer facing, we got to talk about what might be me and Dave's newest pair of sneakers. We're going to--
DAVE BRIGGS: Yep.
JOSH SCHAFER: We're going to see. On Holdings is on a wild ride--
SEANA SMITH: Me, too. Don't leave me out there.
JOSH SCHAFER: Right, Seana likes them as well.
SEANA SMITH: I like that.
JOSH SCHAFER: Dave and I were messaging all day.
SEANA SMITH: I'm the only one of this group that have bought a pair of these, so let's--
JOSH SCHAFER: That's fair. You have bought--
DAVE BRIGGS: Full disclosure-- I was actually sending a message with On shoes.
JOSH SCHAFER: Dave's been sending me On shoes all day.
SEANA SMITH: OK, all right. Now I don't feel as left out.
JOSH SCHAFER: Let's talk about On. It's on a wild ride today, up over 20%, as the company beat on the top and bottom line. Now, revenue for On was up over-- or nearly over 100% from last year. That net revenue up at over about $360 million, guys. And the other thing I want to point to with On that was interesting to me here is when you take a look at how widespread the revenue gains were. We're talking over 80% in North America, over 80% in Asia, over 80% in Europe. When you talk about how wide that growth is, that is a huge net to cast.
Also, they're projecting gross profit growth, margin growth, of 2% over the next year. That's something when you talk about a growth stage company-- they're investing in growth and they still think their margins are going to improve-- that is going to excite investors every single time. And you see that exciting people today, Dave.
DAVE BRIGGS: You see that on a Wedbush note. In a nutshell, this was a print with almost no holes to poke. And that was not Dan Ives. That was just Wedbush. But a $32 price target actually surprised me because that's only about roughly 17% upside. I figured that might be a higher price target, given there were no holes in it. Did not realize actually how much they had ventured into the apparel category, one occupied by Lululemon and others-- pants, hoodies, jackets, t-shirts-- you name it.
But anecdotally, Josh, I commute with Wall Street, and I have noticed over the past year or two, it has become workwear. It has become officewear for Wall Streeters. It's almost like the new Patagonia vest, if you will. And so that tells you a lot of, it's not just the hardcore runners that they are capturing here. No offense, Wall Street. These are not runners that I'm seeing wear these shoes to work. They have really dominated this category.
JOSH SCHAFER: Which the casual shoes that go with the Lululemon pants, right, and you get the full athleisure sort of jumpsuit because Lululemon, for what they've done in women's footwear or at least started to do, they don't have that comp for men's footwear.
DAVE BRIGGS: Right.
JOSH SCHAFER: And I wear Lululemon pants every day and--
DAVE BRIGGS: And I thought that was a miss. And the Roger was a really smart play for them. I always have said this. I'm surprised the messy has not been a similar play from Adidas, who has a massive hole to fill and has the most famous athlete on the planet.
SEANA SMITH: Yeah, and I also think when you take a look at these numbers, the demand here, what also stuck out to me was 90% of their sales during the holiday period. And I looked for these shoes to be on sale when I was purchasing them in the holiday period. They were sold at full price. Speaks a few things. One, to the demand out there simply for their apparel, for their shoes. And then, two, just the inventory issues that we've seen plague so many of their competitors out there doesn't seem like it's having an impact on, On.
JOSH SCHAFER: Impressive inventory control, right, for a retail company where a lot of retail companies have struggled in that department.
DAVE BRIGGS: Other than Jordans, markdowns are a constant in the footwear industry.
