On Holding AG (ONON) Stock Analysis and Metrics

Sector: Consumer Cyclical Industry: Footwear & Accessories CIK: 0001858985

Market Cap 1.55 Bn

P/E 48.46

P/S 0.43

Div. Yield 0.00

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About

On Holding AG is a global sportswear company specializing in the design, development, and distribution of high-performance athletic footwear, apparel, and accessories. The company operates within the competitive sportswear industry, focusing on innovation and premium brand identity to differentiate itself from larger incumbents and new entrants. On Holding AG's products are engineered to blend performance technology with everyday aesthetic appeal, catering to athletes and active lifestyle enthusiasts worldwide. The company generates revenue through...

On Holding AG is a global sportswear company specializing in the design, development, and distribution of high-performance athletic footwear, apparel, and accessories. The company operates within the competitive sportswear industry, focusing on innovation and premium brand identity to differentiate itself from larger incumbents and new entrants. On Holding AG's products are engineered to blend performance technology with everyday aesthetic appeal, catering to athletes and active lifestyle enthusiasts worldwide.

The company generates revenue through the sale of its proprietary footwear, apparel, and accessories, which are marketed under the On brand. Its primary products include running shoes, training shoes, and tennis shoes, as well as a range of apparel designed for various athletic activities. On Holding AG serves a diverse customer base, including professional athletes, fitness enthusiasts, and casual consumers who value performance, design, and sustainability. The company's revenue streams are derived from both wholesale distribution to retail partners and direct-to-consumer sales through its owned retail stores and e-commerce platforms.

• Footwear Segment: On Holding AG's footwear segment is the cornerstone of its business, featuring innovative products such as the Cloud series, which includes models like the Cloudnova, Cloudflyer, and Cloudmonster. These shoes are designed for running, training, and tennis, incorporating proprietary technologies like CloudTec and LightSpray to enhance performance and comfort. The segment caters to a global market of athletes and active individuals seeking high-performance footwear.

• Apparel Segment: The apparel segment complements the footwear offerings with a range of performance-oriented clothing, including tops, bottoms, and accessories. These products are designed to support various athletic activities and are marketed to consumers who prioritize functionality and style. The apparel segment is expanding as the company aims to become a full sportswear brand, delivering head-to-toe looks across established and emerging product verticals.

• Accessories Segment: On Holding AG also offers a selection of accessories, such as socks, hats, and bags, which are designed to complement its footwear and apparel lines. These products are aimed at enhancing the overall athletic experience and are marketed to consumers who seek a cohesive look and feel.

On Holding AG operates in a highly competitive industry characterized by brand strength, product quality, technical innovation, and sustainability credentials. The company faces competition from established global sportswear brands such as Nike, Inc., adidas AG, and Under Armour, Inc., as well as specialized performance brands like Brooks Sports Inc., Hoka One One (Deckers Outdoor Corporation), ASICS Corporation, and New Balance Athletics, Inc. Additionally, On Holding AG competes with lifestyle brands like lululemon athletica Inc., Alo, LLC., Patagonia, Inc., Arc’teryx Equipment, Anta Sports Products Limited, and Li-Ning Company Limited. Despite the competitive landscape, On Holding AG differentiates itself through its commitment to premium brand identity and relentless focus on technical product innovation, which allows it to compete effectively against both larger incumbents and new entrants.

The company's customer base is diverse, encompassing professional athletes, fitness enthusiasts, and casual consumers who value performance, design, and sustainability. On Holding AG's products are distributed through a multi-channel strategy, including wholesale partnerships with top retailers and direct-to-consumer sales through its owned retail stores and e-commerce platforms. The company's global footprint includes retail locations in the Americas, Europe, and Asia Pacific, with a significant presence in China, where it operates a mix of mall-based stores and standalone retail stores. This strategic distribution approach enables On Holding AG to reach a broad audience and drive sustained growth in the competitive sportswear market.

Investment thesis

Bull case

On's recent results demonstrate that the company has exceeded its own 3‑year growth targets, posting a 33% constant currency net sales increase in 2024. The brand has successfully leveraged its premium positioning to command higher price points, reflected in a 60.6% gross profit margin that exceeds the 60% midpoint of its strategic goal. This margin strength indicates that the company can absorb modest cost inflation while still delivering attractive profitability to shareholders. Furthermore, the expansion of its direct‑to‑consumer channel has already translated into a record 48.8% share of sales, reducing reliance on wholesale partners and improving margin quality.
The company has effectively broadened its product mix beyond running shoes to include tennis, training and apparel, with apparel sales surpassing CHF 100 million for the first time. This diversification offers a dual benefit: it taps into the high‑margin head‑to‑toe apparel market and mitigates the cyclical volatility of the footwear segment. The strategy is underpinned by strong retail evidence; in high‑end flagship stores the apparel mix exceeds 20% of transactions, indicating robust consumer acceptance of the full‑line proposition. As the company scales its online commerce engine, it will be able to further cross‑sell apparel to its established sneaker customer base, amplifying incremental revenue.
On has secured a series of high‑profile brand ambassadors that resonate with younger audiences, such as Zendaya and FKA twigs, while maintaining long‑term ties to Roger Federer. These collaborations create cultural relevance that extends beyond sports, positioning the brand at the intersection of performance and lifestyle. The effect is visible in a doubling of Gen‑Z awareness in the United States, which is a demographic known for high brand loyalty and willingness to pay premium prices. This cultural cachet is a significant intangible that is not fully captured in financial statements but enhances future growth prospects.
The company’s strategic retail rollout has proven to be a powerful halo effect in key markets. The introduction of flagship stores in Paris, Milan, and Chicago has directly correlated with increased online traffic and sales volume, demonstrating a strong omnichannel synergy. Additionally, the company’s entry into emerging markets through both owned and franchised stores—such as Santiago de Chile and Jakarta—provides early mover advantage in regions with rising disposable income. This geographic diversification will cushion the business against localized economic downturns.
On’s investment in a fully automated warehouse in Atlanta is a forward‑looking catalyst that will reduce fulfillment lead times and lower per‑unit logistics costs as volume scales. While the transition period may impose short‑term costs, the long‑term savings are projected to free up capital for marketing and product innovation. Automation also enhances order accuracy, improving customer satisfaction and repeat purchase rates. The strategic focus on operational excellence aligns with the company’s overall margin expansion plan, targeting an adjusted EBITDA margin of 17%–17.5% in 2025.

On's recent results demonstrate that the company has exceeded its own 3‑year growth targets, posting a 33% constant currency net sales increase in 2024. The brand has successfully leveraged its premium positioning to command higher price points, reflected in a 60.6% gross profit margin that exceeds the 60% midpoint of its strategic goal. This margin strength indicates that the company can absorb modest cost inflation while still delivering attractive profitability to shareholders. Furthermore, the expansion of its direct‑to‑consumer channel has already translated into a record 48.8% share of sales, reducing reliance on wholesale partners and improving margin quality.
The company has effectively broadened its product mix beyond running shoes to include tennis, training and apparel, with apparel sales surpassing CHF 100 million for the first time. This diversification offers a dual benefit: it taps into the high‑margin head‑to‑toe apparel market and mitigates the cyclical volatility of the footwear segment. The strategy is underpinned by strong retail evidence; in high‑end flagship stores the apparel mix exceeds 20% of transactions, indicating robust consumer acceptance of the full‑line proposition. As the company scales its online commerce engine, it will be able to further cross‑sell apparel to its established sneaker customer base, amplifying incremental revenue.
On has secured a series of high‑profile brand ambassadors that resonate with younger audiences, such as Zendaya and FKA twigs, while maintaining long‑term ties to Roger Federer. These collaborations create cultural relevance that extends beyond sports, positioning the brand at the intersection of performance and lifestyle. The effect is visible in a doubling of Gen‑Z awareness in the United States, which is a demographic known for high brand loyalty and willingness to pay premium prices. This cultural cachet is a significant intangible that is not fully captured in financial statements but enhances future growth prospects.
The company’s strategic retail rollout has proven to be a powerful halo effect in key markets. The introduction of flagship stores in Paris, Milan, and Chicago has directly correlated with increased online traffic and sales volume, demonstrating a strong omnichannel synergy. Additionally, the company’s entry into emerging markets through both owned and franchised stores—such as Santiago de Chile and Jakarta—provides early mover advantage in regions with rising disposable income. This geographic diversification will cushion the business against localized economic downturns.
On’s investment in a fully automated warehouse in Atlanta is a forward‑looking catalyst that will reduce fulfillment lead times and lower per‑unit logistics costs as volume scales. While the transition period may impose short‑term costs, the long‑term savings are projected to free up capital for marketing and product innovation. Automation also enhances order accuracy, improving customer satisfaction and repeat purchase rates. The strategic focus on operational excellence aligns with the company’s overall margin expansion plan, targeting an adjusted EBITDA margin of 17%–17.5% in 2025.

Bear case

The company’s reliance on a high‑price premium model introduces significant pricing risk, especially in a consumer environment where discretionary spending is volatile. As economic conditions tighten, even affluent consumers may shorten their discretionary budgets, forcing the brand to confront a potential price elasticity that could erode margins. The management’s emphasis on premium positioning may not translate into sustained sales growth if competitors introduce lower‑priced alternatives with comparable performance. This pricing vulnerability is not fully reflected in the current valuation and warrants caution.
On’s operational execution faces notable supply chain challenges that were highlighted in the Q&A, particularly disruptions in North America and delayed automation at its Atlanta warehouse. These operational hiccups have already impacted delivery timelines and potentially diluted the brand’s promised customer experience. While management expressed optimism about resolving these issues, the associated costs and reputational damage could persist longer than anticipated, reducing net operating income. The risk of repeated supply chain disruptions remains elevated given the company’s rapid expansion into new markets.
The expansion of the retail footprint, while a strategic growth driver, introduces significant capital expenditures and operational complexity. The company has increased its retail space to over 10,000 square meters, a move that requires sustained capital outlay for lease, construction, and store operations. If the incremental sales volume does not match expectations, the return on investment could be lower than projected, putting pressure on profitability. Moreover, the retail model is inherently sensitive to macroeconomic swings and changes in consumer shopping behavior.
The company’s heavy marketing spend—currently around 11%–12% of sales—exerts downward pressure on net income. While upper‑funnel investment is critical for brand building, the diminishing marginal returns on marketing spend could result in an over‑exposure to advertising costs relative to incremental revenue. This is especially concerning in a saturated sportswear market where competitive spend is also increasing. Management’s commitment to maintaining high marketing spend may limit flexibility in adjusting to market dynamics.
On’s focus on high‑margin product categories such as Cloud and Light Spray leaves it vulnerable to shifts in consumer preferences. If running shoes or lightweight training footwear lose favor to newer innovations from competitors, the company could experience a loss of market share in its core segments. The brand’s heavy dependence on these categories means that a slowdown in demand could disproportionately affect top line growth. Diversifying the product mix further is a strategic priority, but the execution of such a shift carries inherent risk.

The company’s reliance on a high‑price premium model introduces significant pricing risk, especially in a consumer environment where discretionary spending is volatile. As economic conditions tighten, even affluent consumers may shorten their discretionary budgets, forcing the brand to confront a potential price elasticity that could erode margins. The management’s emphasis on premium positioning may not translate into sustained sales growth if competitors introduce lower‑priced alternatives with comparable performance. This pricing vulnerability is not fully reflected in the current valuation and warrants caution.
On’s operational execution faces notable supply chain challenges that were highlighted in the Q&A, particularly disruptions in North America and delayed automation at its Atlanta warehouse. These operational hiccups have already impacted delivery timelines and potentially diluted the brand’s promised customer experience. While management expressed optimism about resolving these issues, the associated costs and reputational damage could persist longer than anticipated, reducing net operating income. The risk of repeated supply chain disruptions remains elevated given the company’s rapid expansion into new markets.
The expansion of the retail footprint, while a strategic growth driver, introduces significant capital expenditures and operational complexity. The company has increased its retail space to over 10,000 square meters, a move that requires sustained capital outlay for lease, construction, and store operations. If the incremental sales volume does not match expectations, the return on investment could be lower than projected, putting pressure on profitability. Moreover, the retail model is inherently sensitive to macroeconomic swings and changes in consumer shopping behavior.
The company’s heavy marketing spend—currently around 11%–12% of sales—exerts downward pressure on net income. While upper‑funnel investment is critical for brand building, the diminishing marginal returns on marketing spend could result in an over‑exposure to advertising costs relative to incremental revenue. This is especially concerning in a saturated sportswear market where competitive spend is also increasing. Management’s commitment to maintaining high marketing spend may limit flexibility in adjusting to market dynamics.
On’s focus on high‑margin product categories such as Cloud and Light Spray leaves it vulnerable to shifts in consumer preferences. If running shoes or lightweight training footwear lose favor to newer innovations from competitors, the company could experience a loss of market share in its core segments. The brand’s heavy dependence on these categories means that a slowdown in demand could disproportionately affect top line growth. Diversifying the product mix further is a strategic priority, but the execution of such a shift carries inherent risk.

Classes of share capital [axis] Breakdown of Revenue (2025)

Products and services [axis] Breakdown of Revenue (2025)

Peer comparison

Companies in the Footwear & Accessories

S.No.	Ticker	Company	Market Cap	P/E	P/S	Total Debt (Qtr)
1	NKE	NIKE, Inc.	66.16 Bn	29.24	1.42	7.03 Bn
2	DECK	Deckers Outdoor Corp	15.61 Bn	15.26	2.90	-
3	BIRK	Birkenstock Holding plc	8.57 Bn	17.98	3.49	1.34 Bn
4	CROX	Crocs, Inc.	5.54 Bn	-74.58	1.37	1.23 Bn
5	SHOO	Steven Madden, Ltd.	2.73 Bn	61.19	1.08	0.23 Bn
6	WWW	Wolverine World Wide Inc /De/	2.04 Bn	15.39	1.09	0.55 Bn
7	ONON	On Holding AG	1.55 Bn	48.46	0.43	-
8	DBI	Designer Brands Inc.	0.40 Bn	-45.03	0.14	0.01 Bn

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On Holding AG (NYSE: ONON)

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Investment thesis

Bull case

Bear case

Classes of share capital [axis] Breakdown of Revenue (2025)

Products and services [axis] Breakdown of Revenue (2025)

Peer comparison

Research Tools

On Holding AG (NYSE: ONON)

About

Investment thesis

Bull case

Bear case

Classes of share capital [axis] Breakdown of Revenue (2025)

Products and services [axis] Breakdown of Revenue (2025)

Peer comparison

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