Why On Holdings AG rose 13.4% in August

Athletic shoe challenger shares On Holdings AG (ONON 0.65%) rose 13.4 percent in August, according to S&P Global Market Intelligence data.

On held its second-quarter earnings release on August 13, posting strong growth that beat expectations. Following an exciting period with the start of the Summer Olympics and On’s introduction of new footwear technology, management also reiterated an optimistic outlook for the rest of this year.

Lightspray, Zendaya and the Paris Olympics

In the second quarter, On grew revenue by 27.8% to 567.7 Swiss francs (CHF), which beat expectations, while adjusted earnings per share (non-GAAP) came in at 0.14 CHF, slightly missing expectations. Despite the “mixed” results, management reiterated its full-year growth guidance of 30%, which would imply some acceleration in the second quarter.

That excitement likely comes from several new brand and distribution drivers launched in Q2. These include the company’s new Lightspray technology unveiled in July, a long-term partnership with actress Zendaya announced in early June, and more store openings in Paris for the Olympics and Hong Kong during the quarter.

The company’s Lightspray technology is a unique technology. To make Lightspray sneakers, On manufactures the entire toe of the shoe above the sole through a one-step robotic manufacturing process with materials made from recycled plastic. The process allows the shoe to be ultra-thin and lightweight, while reducing the company’s carbon footprint by 75% for the shoe’s manufacturing process and eliminating the need for glue.

Of note, marathon runner Helen Obiri won the Boston Marathon in April wearing a prototype version of the shoe. So On’s management is probably encouraged that there will be a high demand for this new high-tech runner.

I’m off to the races, but so is the share price

On is definitely a new footwear stock to watch, with its ethos of innovation challenging the likes of NIKE (NKE 0.95%) and other established brands. Of course, the stock isn’t cheap, trading around 80 times trailing earnings and 40 times forward estimates. However, if this stock declines for any temporary or market-driven reason, it’s an innovative consumer name that should be on any investor’s watch list.