On Holding Achieves Record Q3 Sales and Margins, Eyes Future Growth in Premium Market

Don’t tell On Holding that the active market is challenged.

The Zurich-based company reported record sales and its highest gross profit margin in its third-quarter financial update early Tuesday.

For the period ended Sept. 30, On’s sales rose 17.2 percent over a year earlier, hitting 931.4 million Swiss francs, or $1.1 billion at current exchange. Net income jumped 36.9 percent to 162.8 million Swiss francs. Gross profits increased 29.5 percent to 676 million francs and gross profit margin hit 72.6 percent, up from 65.7 percent in the prior-year period.

Sales through the direct-to-consumer channel rose 25 percent to 393.3 million francs, while wholesale sales increased 12.2 percent to 538.2 million francs.

And the gains were strong across the board with net sales in Europe, the Middle East and Africa increasing 17.9 percent to 251.4 million francs; the Americas rising 12.4 percent to 490.1 million francs and Asia-Pacific up 31.1 percent to 189.9 million.

By category, sales of shoes rose 15.4 percent to 843.7 million francs; apparel sales rose 38.7 percent to 69.5 million francs, and accessories were up 39.2 percent to 18.1 million francs.

Adjusted EBITDA increased 42.7 percent to 256.8 million francs.

Caspar Coppetti, founder and co-chief executive officer, said: “Seven weeks after our investor day, we are seeing the On premium playbook do exactly what it was built to do: create breakthrough products, validated by the world’s best athletes and brought to life through premium experiences wherever our fans meet us. The Cloudsurfer 3 is the first proof point of our biggest innovation cycle — and it is just getting started. Each of our strategic growth engines made significant progress this quarter, drawing a new generation of fans to the brand. In a promotional market, we stayed true to who we are and held full price, delivering record sales and record underlying margins.”

Frank Sluis, chief financial officer, added: “At our investor day, we said that premium is not the adjective in our financial model — it is the mechanism. This quarter showed what that means. Products that consumers choose at full price, a higher share of sales through our own channels and the efficiencies of scale delivered the highest gross margin in On’s history, even before tariff refunds. That margin gives us the strength to invest in the innovation, technology, stores and new sports behind our next phase of growth, and every part of that investment maps back to our three-year plan. We are even more excited about that plan today than on the day we presented it.”

But On is not without its challenges. On Monday, the company confirmed reports that American tennis star Ben Shelton would be leaving the company at the beginning of the year, reportedly to join New Balance.

On confirmed the impending departure of the number four-ranked player, saying: “We are very proud of our partnership with Ben and everything we have achieved together on and off the court over the past four years. Athlete partnerships in tennis are and will remain a core pillar of On’s approach. While we ultimately felt that the proposed terms and structure for continuing the partnership were no longer the right fit for On, we wish Ben nothing but the very best on his journey.”

Roger Federer, one of the sport’s all-time greats, is an investor and ambassador for On, and the company also has a deal with Iga Swaitek, the top-ranked female player.

But it’s not just running and tennis that On is eyeing for future growth: Soccer is also seen as a key opportunity for the company and plans call for launching golf next year. In September, it signed Kylian Mbappé to be the face of this new category, with Thierry Henry as director. Before the signing, Mbappé had a relationship with Nike that spanned two decades.

However, Mbappe ran afoul of Chinese consumers when he made an off-handed comment referring to a Chinese dictator, believed to be the country’s former leader Mao Zedong. Although he later apologized for the remark, the issue resulted in significant backlash in that country.

Even so, in reporting third-quarter earnings, On cited strong momentum in the three growth engines identified at its investor day. The first is performance running, where the Cloudsurfer 3 has experienced strong sell-outs in prelaunches within the run specialty channel. In lifestyle run, the Cloudtilt remains one of the industry’s fastest-growing sneaker franchises. And in apparel, women’s outpaced men’s with a sales increase of 38.7 percent, thanks to the latest Zendaya collection, which On said is its “most visible apparel launch yet.”

In an interview, Sluis cited the company’s ability to produce on these “three key building blocks.” In performance running, he said the first generation of the company’s superfoam shoes are performing well and he revealed that next year, the technology will be offered in the entire portfolio of performance products.

In lifestyle shoes, he said the Cloudtilt has managed to attact more young people to the brand, and in apparel, the performance of Zendaya’s most recent collection, which sports a python print, has been a phenomenal seller. He said that while apparel today is only around 300 million francs, the goal is to increase that figure to 1 billion, at which point it will become “a meaningful part of the business,” Sluis noted.

In some cases, it’s already starting. In the company’s recently opened store in Bondi in Australia, he said, On took an “apparel-first” approach, and as a result, 30 percent of overall sales are coming from that category.

Looking ahead, the company said it expects net sales growth to “accelerate in the fourth quarter,” as it stays true to its premium positioning and full-price selling.

The expected U.S. tariff refunds prompted the company to raise its outlook with sales now expected to grow in the low-20 percent range to 3.47 billion francs, with gross profit margins of 67.5 percent and adjusted EBITDA between 21 and 21.5 percent. The company has projected that it will hit $7 billion in yearly revenue by 2029.

Sluis said that On continues to make strides in a number of areas as other sports brands such as Nike and Under Armour face challenges. In lifestyle, he said, where the market is declining globally and is highly promotional, On has managed to gain “significant share,” he said. In running, the market remains stable and On is growing alongside other brands.

But he stressed that On operates “at the intersection of performance, design and culture,” and continues to work to “redefine what a sportswear brand can be.” He said the company has the “highest full-price sell-through rate,” and is discovering that an increasing number of consumers are willing to invest as they embrace their love of sports.

That’s one of the reasons the company is confident that it will continue to make inroads as it moves into other sports beyond running. That includes golf, where he believes On can be successful as long as it delivers on being authentic and disruptive.

He said players have traditionally had to choose between stability and comfort, but he believes On has “cracked the code” and will be able to offer a shoe with both qualities.