Shares of Swiss footwear and apparel maker On Holding AG (NYSE: ONON) tumbled in premarket trading Tuesday despite reporting strong fourth-quarter and full-year 2025 results and issuing guidance for continued growth in 2026. The stock was down more than 11% as of 8:30 AM EST, as investors reacted to a 2026 sales forecast that fell short of analyst expectations. The company, which has gained prominence through its innovative running shoes and a partnership with tennis legend Roger Federer, reported net sales of 743.8 million Swiss francs ($946 million) for the fourth quarter, a 30.6% increase at constant currencies.
The results mark a strong finish to a year of rapid expansion for On, with full-year sales exceeding 3 billion francs for the first time. This growth has been fueled by a combination of strategic marketing, product innovation, and a focus on the premium end of the athletic footwear market. However, the market’s reaction suggests that investors are closely scrutinizing the company’s future growth trajectory and profitability.
Growth Forecast Falls Short of Expectations
On Holding projects net sales growth of at least 23% in constant currencies for 2026, translating to approximately 3.44 billion francs at current exchange rates. While representing substantial growth, this forecast is below the consensus estimate of 3.7 billion francs among sell-side analysts. The company anticipates an adjusted EBITDA margin between 18.5% and 19% for the year. This discrepancy between On’s guidance and analyst expectations appears to be the primary driver of the stock’s decline.
The company’s growth strategy centers around becoming “the most premium global sportswear brand,” a goal it outlined in a three-year plan announced in 2023, according to a Business Wire press release. This involves maintaining a focus on high-quality products and a direct-to-consumer approach, alongside strategic wholesale partnerships.
Strong Performance in Asia-Pacific Drives Growth
The company’s fourth-quarter performance was particularly strong in the Asia-Pacific region, with sales growing 85.1% at constant currencies. This growth underscores the increasing demand for premium athletic footwear in the region and On’s ability to capitalize on this trend. Sales in the Americas and EMEA (Europe, the Middle East, and Africa) also showed solid growth, increasing by 21.3% and 27.5%, respectively.
CEO Martin Hoffmann emphasized the company’s ability to exceed expectations while reinvesting in key growth areas. “The strength of our premium strategy allows us to exceed our high aspirations while providing the flexibility to reinvest in the high-return areas that we expect will fuel our growth for years to come,” Hoffmann said in a statement. Adjusted EBITDA increased by 31.8% to 131 million francs in the quarter, with a margin of 18.8%, exceeding LSEG estimates of 112.4 million francs.
Navigating a Competitive Landscape
On Holding has successfully carved out a niche in the competitive athletic footwear market, challenging established giants like Nike and Adidas. The company’s innovative CloudTec cushioning technology and its association with Roger Federer have contributed to its brand recognition and appeal. Federer became a shareholder in On AG in November 2019, and the company released a limited-edition shoe, “The Roger,” in July 2020, according to Wikipedia.
However, the company faces increasing competition and a potentially challenging macroeconomic environment. Jefferies analyst Randal Konik, who rates the stock as “Underperform,” cautioned in February that “premium positioning alone may not be enough to sustain price-led growth without risking demand and/or higher promotional activity,” as reported by CNBC. This suggests that maintaining high margins while continuing to grow sales will be a key challenge for On Holding in the coming years.
On Holding’s initial public offering in September 2021 raised approximately $746 million, according to Wikipedia, providing the company with capital to fund its expansion plans. The company’s ability to execute on these plans and navigate the evolving market dynamics will be crucial to its long-term success.
Investors will be closely watching On Holding’s performance in the coming quarters, particularly its ability to maintain its premium pricing strategy and drive growth in key markets. The company’s next earnings report, expected in the spring of 2026, will provide further insight into its progress and outlook.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investing in the stock market involves risks, and investors should conduct their own research before making any investment decisions.
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