A parallel between Hoka and ON

Both Hoka and ON announced their latest quarterly results during the last few weeks. This was the first time ON reported sales of more than 1 billion (CHF in ON's case) over a 12 month rolling period. Hoka did that the previous quarter -  surpassing 1 billion USD in sales - and increased that with its latest quarterly report.

The two brands have a very similar business growth trajectory. Both are among a newer generation of running brands and both offered products that at the time of launch were very different from what existed on the market.

The way they reached this level of success however was quite different. While Hoka was acquired by Deckers Brands very early on in its existence, ON went on to launch an IPO and to become a public company.

Following my earlier posts on both Hoka and ON, I took the opportunity to look at some of the key moments of the two brands' histories and to compare their businesses over the last two years.

History

These are some key elements from the histories of Hoka and ON. While they were launched at roughly the same time, they went quite different paths.

Hoka One One was launched in 2009, and ON Running was launched in 2010. During a time when minimalism was the leading trend in running shoe design, Hoka's first shoes with their maximalist design didn't immediately take off and were even ridiculed initially. Similarly, when ON launched the Cloudracer, it had a very distinguished design, which wasn't in line with the prevaling trends on the market.

Arguably that bold approach from both companies is what has ultimately paid off and made them so successful. Both of them have since doubled down on their initial approaches and that has made their shoes immediately recognisable and very popular, gaining them large, loyal followings.

The path to 1 billion

Despite their different circumstances, the sales growth trajectories of Hoka and ON for the last two years are pretty much identical. That also holds when the sales are broken down per disctribution channel - wholesale vs direct to consumer (DTC).

Further breakdown

ON does report further breakdowns, which provide useful perspectives to its business. I have created charts on two of them below.

Hoka is one of the Deckers Brands and and as such Deckers doesn't report geographic distribution of sales for Hoka specifically. It does however report domestic (US) vs international sales for the whole portfolio of brands. For the six months, ending on 30th September 2022, its international sales make up 32.7% of the total.

So, it's probably safe to assume that the single largest Hoka market is the US and North America, as it is for ON as well.

Finally, shoes have consistently made up more than 90% of the ON total sales for the last two years.

Deckers doesn't provide a breakdown per product type, but shoes are at the core of its portfolio. So, it's probably a safe bet that the Hoka product type breakdown is not too far from from that of ON.