On Holding lifts sales outlook as premium mix drives margin

By Elena Vasquez

On Holding, the Zurich-based company, reported third-quarter net sales of CHF931.4 million ($1.1 billion at current exchange rates), up 17.2% year on year, and raised its sales outlook to CHF3.47 billion after expected U.S. tariff refunds. The period ended Sept. 30, and the early-Tuesday update delivered record sales and On’s highest gross margin to date.

Net income climbed 36.9% to CHF162.8 million. Gross profit rose 29.5% to CHF676 million, lifting gross margin 6.9 percentage points to 72.6% from 65.7%. Adjusted EBITDA increased 42.7% to CHF256.8 million.

What drove the margin gain?

Growth came through both routes to market, with direct-to-consumer sales increasing faster than wholesale:

• Direct-to-consumer sales rose 25% to CHF393.3 million, about 42% of quarterly sales.
• Wholesale sales increased 12.2% to CHF538.2 million.
• Europe, the Middle East and Africa grew 17.9% to CHF251.4 million.
• The Americas increased 12.4% to CHF490.1 million.
• Asia-Pacific advanced 31.1% to CHF189.9 million.
• Shoes generated CHF843.7 million, up 15.4%; apparel reached CHF69.5 million, up 38.7%; accessories rose 39.2% to CHF18.1 million.

Founder and co-CEO Caspar Coppetti said: “Seven weeks after our investor day, we are seeing the On premium playbook do exactly what it was built to do.” He called Cloudsurfer 3 the first proof point of On’s biggest innovation cycle and said full-price selling delivered record sales and underlying margins in a promotional market.

CFO Frank Sluis said: “At our investor day, we said that premium is not the adjective in our financial model — it is the mechanism.” He attributed the record margin to full-price products, a higher own-channel mix and efficiencies of scale, even before tariff refunds.

Sluis said the margin gives On capacity to invest in innovation, technology, stores and new sports under its three-year plan. The update did not quantify that spending or identify factory capacity, certification status or supplier-level cost responsibility.

How are On’s athlete and category plans changing?

On confirmed Monday that No. 4-ranked American tennis player Ben Shelton will leave at the beginning of the year. Reports linked him to New Balance, but On did not confirm that destination. After four years, On said the proposed terms and structure no longer fit, while calling tennis partnerships a core pillar.

Roger Federer remains an investor and ambassador, while On retains a deal with top-ranked women’s player Iga Swaitek.

Soccer is another growth opportunity, with golf planned for next year. In September, On signed Kylian Mbappé for the soccer push and named Thierry Henry as director. His prior Nike relationship spanned two decades.

A remark referring to Mao Zedong and his subsequent apology prompted significant backlash in China. On continued to cite momentum across the three growth engines identified at its investor day.

Which growth engines are scaling?

• Performance running: Cloudsurfer 3 sold out in run-specialty prelaunches, according to On. The first generation of its superfoam shoes performs well, and On plans to extend that technology across its entire performance portfolio next year.
• Lifestyle: On calls Cloudtilt one of the industry’s fastest-growing sneaker franchises and says it has attracted more young people to the brand.
• Apparel: On attributes women’s outperformance to Zendaya’s latest collection, its “most visible apparel launch yet”; the python-print style has been a “phenomenal seller,” Sluis said.

On puts current apparel sales at around CHF300 million and targets CHF1 billion, more than three times the present scale, without providing a deadline. At its newly opened, apparel-first store in Bondi, Australia, apparel accounts for 30% of sales, about four times the category’s 7.5% share of group sales in the quarter.

What changes in the outlook?

On expects fourth-quarter net sales growth to accelerate as it maintains premium positioning and full-price selling. Its outlook now calls for low-20% sales growth to CHF3.47 billion, a 67.5% gross margin and an adjusted EBITDA margin of 21% to 21.5%.

Expected U.S. tariff refunds prompted the increase, but On specified neither the refund amount nor its timing. The company also projects $7 billion in annual revenue by 2029.

Which claims still need proof?

Sluis contrasted On’s progress with challenges at Nike and Under Armour. He said the global lifestyle market is declining and highly promotional, allowing On to take significant share, while the running market remains stable and On continues growing alongside other brands.

He also claimed On has the highest full-price sell-through rate, without disclosing a percentage, peer set or measurement period. His golf thesis requires authenticity and disruption, and he believes On can combine stability and comfort after having “cracked the code.” Those remain company assertions rather than disclosed product or market data.

The near-term test is whether On can sustain full-price demand, scale apparel toward CHF1 billion, replace Shelton and manage China-related reputational risk while delivering the raised forecast without relying on unquantified tariff refunds.