Source: CNBC
Summary
Analyst Randal Konik expressed concerns about On Holding AG, the parent company of sneaker brand On, after visiting an outlet store and finding “relatively new styles” already on sale. According to Konik, this suggests that the brand may be experiencing inventory management issues. On Holding AG reported its Q2 2023 earnings, with revenue growth of 53.5% year-over-year.
Our Reading
The look feels familiar.
On’s sales strategy is reminiscent of past footwear trends. The brand’s rapid growth and subsequent clearance sales evoke memories of similar cycles in the sneaker market. “New” styles hitting outlet stores quickly is a familiar pattern. The trend returns with a new name: “sustainable” fashion. The real question is, how long until last season’s leftovers are rebranded as “vintage”?
Flash Sales and Outlet Stores
The presence of relatively new styles at outlet stores raises concerns about On’s inventory management and sales strategy. This is not the first time a popular sneaker brand has faced similar issues.
The Sneaker Market Cycle
The sneaker market is known for its cyclical nature, with trends emerging, peaking, and eventually fading. On’s rapid growth and subsequent clearance sales are a familiar pattern in this market.
Sustainability and Vintage
The trend of rebranding last season’s leftovers as “vintage” or “sustainable” fashion is a clever marketing move. However, it also raises questions about the true environmental impact of the fashion industry.
Analyst Concerns
Analyst Randal Konik’s concerns about On’s inventory management and sales strategy are valid. The brand’s ability to manage its inventory and maintain a strong sales strategy will be crucial in the coming quarters.
Market Trends
The sneaker market is highly competitive, and trends can shift quickly. On’s ability to adapt to changing consumer preferences and maintain its market position will be key to its long-term success.
Author: Evan Null
