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(Sharecast News) - US-listed shares in Swiss sportswear group On Holding fell sharply in pre-market trading on Tuesday despite better-than-expected third-quarter results, as a one-off US tariff refund temporarily boosted profitability and the company left its full-year sales outlook unchanged.
The trendy running shoemaker reported a 17.2% year-on-year increase in quarterly revenue to CHF931.4m, marginally ahead of market forecasts.
However, adjusted earnings per share of CHF0.54 smashed the CHF0.39 consensus estimate as EBITDA jumped 42.7% to CHF256.8m from CHF179.9m a year earlier.
Bottom-line results were bolstered by CHF52.6m in US tariff refunds, which boosted the gross profit margin to a record 72.6%, compared with 65.7% a year earlier. Excluding the refunds, the margin stood at 66.9%, while the adjusted EBITDA margin was 21.9%.
Despite the headline beat, stock futures were down 5% at $35.64 in pre-market trading in New York.
The one-off tariff benefit, alongside the absence of an upgrade to sales guidance despite the quarterly earnings beat, may have contributed to the negative market reaction, according to analysts.
On maintained its forecast for full-year revenue growth in the low-20% range on a constant-currency basis, implying sales of CHF3.47bn to CHF3.56bn at current exchange rates.
Excluding the tariff refunds, the company raised its gross margin outlook to around 66% from at least 65%, but kept its adjusted EBITDA margin guidance unchanged at 19.5% to 20%.
Co-founder and co-chief executive Caspar Coppetti said: "In a promotional market, we stayed true to who we are and held full price, delivering record sales and record underlying margins."
Direct-to-consumer sales increased 25% during the third quarter, accounting for 42.2% of total revenue, while sales in Europe, the Middle East and Africa rose 19.1% on a constant-currency basis. Growth in the Americas was slower at 12.4%, while Asia-Pacific sales surged 31.9%.
The company expects sales growth to accelerate in the fourth quarter as new products reach consumers ahead of the holiday shopping season.