Swiss sneaker giant On reported net sales of CHF 567.7 million ($654.4 million) in the three months ending June 2024, up 28 percent from the same period last year and setting a new record for revenue for the second straight quarter.

However, shares were down as much as 10 percent in pre-market trading Tuesday, after its quarterly gross margin of 59.9 percent narrowly missed Wall Street estimates of 60.1 percent, while its direct-to-consumer revenue and earnings per share also fell just shy of analyst expectations. The company’s shares are still up 47 percent since the beginning of the year.

On received a boost from its recent expansion into apparel and accessories, sales of which were up 63 percent and 24 percent year-on-year, respectively. The brand, which began as a running sneaker specialist, was also buoyed by its expansion across Asia — particularly in China and Japan — where it grew sales by 85 percent year-over-year in the second quarter.

On also reported healthy bottom-line growth, generating net income of CHF 30.8 million, nearly 10 times the CHF 3.3 million it earned in the second quarter of 2023.

On reaffirmed its guidance for full-year 2024, forecasting a gross margin of around 60 percent and record net sales of CHF 2.26 billion ($2.6 billion).

In March, the company launched its tennis apparel category, and the following month it announced a partnership with British singer FKA Twigs, who will oversee the design and marketing of the company’s new training apparel and footwear vertical. On also signed Zendaya as its latest ambassador in June — a move designed to grow the brand’s visibility in North America and promote its lifestyle apparel. The actress has already starred in several high-profile campaigns for the brand with ambassador and shareholder Roger Federer.

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Swiss Sportswear Brand On Taps Zendaya as Latest Ambassador

The American actress will co-produce brand campaigns and collaborate on one-off collections as the label continues its expansion beyond the running category.