^{Photo: Bloomberg.com}

Swiss performance footwear company On Holding saw its shares fall about 14% in premarket trading Tuesday after reporting record 2025 results but offering guidance below analyst expectations. Despite surpassing 3 billion Swiss francs ($3.82 billion) in annual sales for the first time, the company now expects 2026 net sales to reach at least 3.44 billion francs — a 23% increase in constant currencies — compared with analyst forecasts of roughly 3.7 billion francs.

Record Sales and Profitability in 2025

On’s 2025 financial performance highlighted strong momentum across several key metrics. Full-year adjusted EBITDA jumped 46.3% to 567 million francs, pushing the margin to 18.8%. Net sales rose 35.6% in constant currencies, fueled by robust demand in the Americas, Europe, Middle East, and Africa (EMEA), and exceptional growth in Asia-Pacific, where fourth-quarter sales surged 85.1% at constant currencies.

During the holiday quarter, On beat expectations with revenue of 743.8 million francs versus 723.5 million anticipated, and adjusted earnings per share of 25 cents versus 20 cents expected. Gross margin reached 63.9%, exceeding the 62.5% estimate, while adjusted EBITDA margin climbed to 17.6%, far above analyst predictions of 15.9%.

Strategic Growth Focus for 2026

Co-founder and executive chair David Allemann emphasized that On is taking a deliberate approach to growth. “We’re building a brand for the next decade and so we’re strategic in how we penetrate channels, wholesale, and stores,” he told CNBC. The company aims to expand selectively, prioritizing high-value markets and carefully managing franchise rollout to maintain its premium positioning.

Slower projected growth reflects this strategic approach. While a 23% increase in constant currency sales still outpaces most competitors, it marks a slowdown from 2025’s pace and underscores the company’s focus on sustainable long-term expansion rather than rapid short-term gains.

Geographic Performance and Consumer Trends

The Asia-Pacific region continues to be a standout, with strong engagement in China, Tokyo, and Shanghai. The Americas and EMEA grew 21.3% and 27.5%, respectively, during the fourth quarter. On has increasingly captured younger consumers, particularly 18- to 34-year-olds, who are discovering the brand through apparel as much as footwear, contributing to higher basket sizes and presenting growth opportunities for women’s products.

On is also taking share from established rivals like Nike and Adidas, appealing to “ageless athletes” seeking performance-driven footwear and apparel. Allemann highlighted a broader societal shift toward health, longevity, and performance, which is reshaping spending patterns globally.

Outlook and Market Challenges

On is now in the final year of its strategy to double sales to 3.55 billion francs and push EBITDA margins to at least 18% by 2026. Analysts warn that competitive intensity and pricing pressures could challenge growth, especially in the premium segment. Jefferies analyst Randal Konik noted that “premium positioning alone may not be enough to sustain price-led growth without risking demand or increased promotional activity.”

Future growth will depend on On’s ability to capture consumers beyond major urban hubs, expanding reach across the Americas and globally while maintaining its premium brand identity. Planned store openings remain concentrated in cities like Boston, London, and Stockholm, though Allemann affirmed the company’s commitment to broad market penetration over the long term.

While 2025 was a record year for revenue and profitability, On’s cautious 2026 guidance reflects a strategic recalibration that prioritizes sustainable expansion and long-term brand value over aggressive short-term growth.