On Holding Forecasts Slower Growth Amid Strategic Premium Push
Swiss athletic footwear and apparel company On Holding (ON) announced a more modest sales growth forecast for 2026, projecting constant currency net sales growth of at least 23% to reach a minimum of 3.44 billion Swiss francs ($4.38 billion). While this pace would still outpace many rivals, it marks a deceleration from the 35.6% growth achieved in fiscal 2025 and fell short of analyst consensus of approximately 3.7 billion francs. The guidance sent shares down 14% in premarket trading on Tuesday, though the stock had been largely flat for the year prior to the announcement.
A “Strategic” Approach to Long-Term Brand Building
In an interview with CNBC, On’s co-founder and executive chair, David Allemann, framed the guidance as a deliberate, long-term strategy. “We don’t want to build a brand just for the next years,” Allemann stated. “We’re building a brand for the next decade.” He explained that the company is being “strategic” in its expansion, carefully managing wholesale channel penetration, the pace of company-owned store rollouts, and franchise development to protect its premium positioning. This measured approach aims to sustain the brand’s high-end appeal rather than chase short-term volume.
Mixed Holiday Quarter: Strong Margins Offset Some Revenue Soft Spots
For the fiscal fourth quarter ended December 31, On reported mixed results that overall beat Wall Street expectations on both profit and revenue, according to data from LSEG. The company earned an adjusted 25 cents per share versus the 20 cents expected, and revenue reached 743.8 million francs, up 22.6% year-over-year and above the 723.5 million franc estimate.
Where On Excelled and Fell Short
The quarter featured notable strengths in profitability. Gross margin expanded to 63.9%, exceeding the 62.5% forecast, while adjusted EBITDA margin surged to 17.6%, far ahead of the 15.9% consensus expectation, per StreetAccount. This reflected strong operational execution and brand leverage.
However, not all categories performed as hoped. Revenue from the direct-to-consumer channel and sales in the key Americas and Asia-Pacific geographies came in below estimates. Furthermore, apparel and accessories sales both disappointed, highlighting an ongoing challenge in diversifying revenue beyond its core footwear business.
Net income for the quarter was 69.1 million francs (21 cents per share), down from 89.5 million francs (28 cents per share) in the prior year, a decline partly tied to increased investment and strategic decisions.
Regional Performance: Asia-Pacific Shines, Americas Face Headwinds
Geographically, On’s growth was robust but uneven. The Asia-Pacific region was a standout, with constant currency sales soaring 85.1% in the quarter. Allemann pointed to strong consumer resonance, noting long lines at its new Tokyo store and in Shanghai. “We’re really forging our own path,” he said, emphasizing a global strategy that isn’t solely reactive to competitors.
Growth in the EMEA region was 27.5%, while the Americas grew at a more modest 21.3%. The slowdown in the Americas, a critical market, appears to be a key factor behind the cautious 2026 outlook. Allemann indicated the company is working to expand beyond coastal urban hubs like New York and Los Angeles to a broader athletic audience across the region.
Competitive Context: Gaining Share in a Shifting Landscape
On’s success comes as it continues to take market share from legacy giants Nike and Adidas, particularly by appealing to a new generation of consumers with innovative performance products like its Cloudmonster and Roger Federer-endorsed lines. Allemann describes the target as an “ageless athlete,” noting the brand is gaining traction across age brackets but finding particular success with consumers aged 18 to 34. Interestingly, this younger demographic often discovers On first through its apparel, which presents a significant growth opportunity, especially in competing with Nike’s broader apparel portfolio and reaching more female consumers.
The company’s premium, no-discount strategy has been a cornerstone of its identity. However, some analysts warn this may face pressure. Randal Konik of Jefferies, who rates the stock Underperform, noted in late February that “in a tougher pricing environment, and with competitive intensity rising, premium positioning alone may not be enough to sustain price-led growth without risking demand and/or higher promotional activity.”
On’s gains in Asia-Pacific, especially China, contrast sharply with Nike’s struggles there; Nike reported a 17% sales decline in its most recent quarter. On’s full-year 2025 adjusted EBITDA grew 46.3% to 567 million francs, achieving an 18.8% margin, slightly exceeding its strategic target of an 18% margin by 2026.
The Road Ahead: Balancing Aggressive Growth with Premium Discipline
On is in the third and final year of its public strategy to double sales and achieve industry-leading margins, with the ultimate goal of becoming “the most premium global sportswear brand.” The 2026 forecast suggests the company is intentionally tempering the hyper-growth of recent years to safeguard its brand equity and margins. The market’s reaction indicates investor concern that this strategic caution may limit upside, especially as valuation remains high and competitive pressures intensify.
The company’s ability to continue its ascent hinges on several factors: deepening its apparel business, expanding its wholesale and retail footprint strategically in the Americas, and maintaining its “ageless athlete” appeal without diluting its premium image. As Allemann summarized, the company is witnessing a “fundamental societal shift” where consumers are investing in health and performance, a
