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On co-CEOs look to expand in retail in 'a long-term, durable way'

On (ONON), the Swiss-based athletic shoe and apparel maker, plans to maintain a steady pace on the road to expansion.

At the 29th annual Goldman Sachs Retail Conference, On co-CEO Marc Maurer told Yahoo Finance that the company is pursuing a "very targeted channel expansion" in "a long-term durable way."

"Rather than adding a new retailer with 100 doors in the first year, we want to do that over a couple of years," Maurer told Yahoo Finance Live (video above), adding: "We want to make sure we bring the right product at the right time to the right consumer so we can build a long-term growth platform."

SS22 Cloudneo (Courtesy: On Running)
SS22 Cloudneo (Courtesy: On Running)

In recent months, the sportswear company opened flagship stores in Zurich and Tokyo. Prior to that, On unveiled a store in New York, which inspired plans to open a Los Angeles store this month and a Miami location in December after a record second quarter.

In the second quarter, sales at the company increased by 66.6% year over year driven by wholesale growth of 70.1% and direct-to-consumer growth of 60.8%. In North America alone, sales increased by 102.5% compared to the prior year.

Although the increase in sales is more than welcomed, fulfilling the demand has had its challenges.

"The supply chain is way more normal than it used to be," Maurer shared; however, the company is still facing two major issues.

“One, there's very little visibility on the freight…which makes warehousing, bounce tracking, and so on complicated,” Maurer said. “And then, if you grow at 103% in the U.S., that's a lot of growth to move in a warehouse. So to be able to bring all these products out on time is a big challenge for us.”

On is also focused on sustainable growth in more ways than one. On Thursday, the Roger Federer-backed company unveiled a new resale site called Onward that advances its goal of becoming a "circular company."

"Consumers can send back their used product and then we'll resell it for them," Maurer explained. "We can also use some of the used product that we have in our warehouse and resell it at the lower price. So this is really kind of a second usage platform."

As part of the company's ongoing sustainability initiatives, the company also launched the Cyclon circularity program. The first community of Cyclon subscribers in the U.S. received the Cloudneo shoe in the second quarter, a fully recyclable product that can be exchanged for a new pair every six months.

Brooke DiPalma is a producer and reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.

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