Updated 4:38 p.m. ET Mar. 3
On Holding continued to run hotter than Wall Street expected in the fourth quarter as the Zurich-based running brand posted sales and profits that exceeded expectations.
But revenue guidance came in below expectations for 2026 and drew a lukewarm response from analysts, driving the stock down on Tuesday, albeit on a day where the overall market was in freefall.
Shares of On fell 6 percent to $43.91 at the end of trading Tuesday on Wall Street.
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The company said fourth-quarter net sales rose 22.6 percent to 743.8 million Swiss francs. Analysts were expecting a 19.9 percent increase in sales. Adjusted diluted earnings per share decreased to 0.25 Swiss francs from 0.33 francs the prior year, but still came in better than the 0.21 Wall Street had projected.
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On said net sales through direct-to-consumer sources rose 21.7 percent to 360.6 million Swiss francs, while the wholesale channel increased 23.4 percent to 383.2 million francs.
Sales in the Europe, the Middle East and Africa region rose 24.2 percent to 183 million Swiss francs, while the Americas division was up 12.8 percent to 434.3 million Swiss francs and Asia-Pacific increased 70.8 percent to 126.5 million Swiss francs.
By category, sales from shoes rose 20.8 percent to 687.3 million Swiss francs, while apparel sales increased 38.3 percent to 45.1 million Swiss francs, and accessories sales gained 117.7 percent to 11.4 million Swiss francs.
The company also managed to post sales that exceeded 3 billion Swiss francs for the first time last year — an increase of 30 percent that just inched past analyst expectations of a 29.3 percent sales gain.
Adjusted diluted earnings per share decreased to 0.80 Swiss francs from 0.97 Swiss francs for the year.
On expanded its retail fleet last year, adding 18 doors to bring the total to 70 stores globally. In those stores, apparel and accessories account for 15 percent of sales, Martin Hoffmann, chief executive officer and chief financial officer, told WWD. And in the flagships, the percentage is closer to 20.
Apparel and accessories now account for 7 percent of overall sales with growth in every region and channel.
“We’re very happy with apparel,” he said. “Ten percent of new customers come to us through apparel now. It’s a strong acquisition category and helps us grow our basket size. The opportunity is massive.”
The collection, which blends performance attributes with fashion styling, helps set On apart, he said. “The goal is to combine performance and sport. Sports is the new fashion and movement is the new luxury,” he said. This year, the company will heighten its focus on women, offering more “refined studio and training collections,” he added.
On a call with analysts Tuesday morning, David Allemann, cofounder and executive co-chairman, said that while performance footwear “will always be our anchor…, we are building a complete sportswear house.” In addition to running clothes, On is also leaning into apparel for the gym and “on the streets,” he added. Tennis has also proven to be a strong category and was, in fact, the company’s fastest growing category in 2025.
Hoffmann said that the new stores are about 40 percent larger on average than the older units, “a direction we will continue,” and a move that better showcases apparel. The plan, he said, is to add between 15 and 20 stores this year.
“DTC grew faster than wholesale,” he said, which indicates the “importance of connecting with the customer directly.”
Hoffmann said On’s continued ability to grow is proof that its premium positioning is working.
“This is not a moment to engage in sales events, but to execute our strategy,” he said, pointing to the “super-strong fourth quarter, which was even better than expected, across all regions, and all channels: e-comm, retail and wholesale.”
Clearly, the company is continuing to expand on several fronts at once and has no intention of letting up.
“Surpassing the CHF $3 billion [or nearly $4 billion] annual revenue milestone with record profitability is a profound validation of our vision to build the world’s most premium global sportswear brand,” said Allemann. “We are witnessing a fundamental societal shift, as people globally replace traditional markers of status with a commitment to health, longevity and performance. On is uniquely positioned to deliver what this discerning consumer demands — from scaling breakthrough innovations like LightSpray to deepening our cultural resonance and delivering our fullest brand expression from toe-to-head. We are building a brand designed for the future of movement.”
Hoffmann said this year will represent On’s “most exciting product pipeline ever.” That will include the scale of its popular LightSpray technology. He said that includes opening a factory in South Korea with 30 times more production capacity. The LightSpray Cloudmonster 3 Hyper mass market shoe with a 3D-printed upper is scheduled to be launched on Thursday.
In addition to LightSpray, On will also lean into innovation in its core running franchises and expand its apparel offering.
As a result, the firm projected that net sales this year will grow by at least 23 percent on a constant currency basis, reaching at least 3.44 billion Swiss francs. It is also expecting a gross profit margin of at least 63 percent and an adjusted EBITDA between 18.5 percent and 19 percent. Apparel is expected to “meaningfully outpace overall growth,” Hoffmann said, and DTC is seen “outperforming wholesale.”
Dylan Carden of William Blair said that 2026 revenue guidance was set some 6 percent below initial expectations for at least 3.44 billion Swiss francs, a figure he said would be below the implied three-year target of 3.52 billion set in late 2023. In addition, a strong Swiss franc, which has strengthened around 15 percent against the dollar since October of 2023, is also impacting the company. He said this “sets management back a step in a market that lacks any sense of nuance,” but still views the company as one of his “top picks.”
Truist Securities also cited the currency headwinds and added that “investors were looking for more upside” than the 23 percent growth projections for fiscal 2026, which would be below the Street’s forecast of 3.67 billion Swiss francs. But the company still believes On’s “underlying momentum remains very robust and we see [opportunities] for topside potential.”
Jay Sole of UBS said On continues to be one of softlines’ best growth stocks and he expects it “will prove resilient over the medium term” as the company continues to benefit from the strength of the health and wellness trend. And Tom Nikic of Needham said he was “not concerned” and continued to view the stock as “a buying opportunity.”
In other news, on Tuesday, On revealed a multiyear partnership with Kith, centered around running. The two will launch a Kith for On collection for spring that will include two original footwear silhouettes as well as a New York City-based Kith Run Team. The sneakers will be the K-Tech 1 and K-Tech 2 models, featuring newly designed uppers, Cloudswift tooling and a CloudTec cushioning system and dual-density HelionTM foam midsole.
Complementing the footwear will be a reimagined collection of co-branded jackets, T-shirts, tanks, sports bras, shorts and pants as well as a cap and waist pack.
The Kith Run Team brings together local athletes, coaches and runners and began training in February for their first half-marathon in April.
Looks from the collab will become available on Wednesday.