Jefferies has reiterated its ‘Underperform’ rating on shoemaker On Holding (NYSE:ANON) after the company announced a leadership overhaul that will see co-founders David Allemann and Caspar Coppetti take on dual roles as executive co-chairmen and co-CEOs, while current CEO Martin Hoffmann departs.
The broker framed the move as a reaction to mounting operational complexity and intensifying competition, particularly from Nike, rather than a signal of strength. Management said the change is aimed at driving the “next phase of global expansion,” but Jefferies argued it reflects a more defensive posture.
“The departure of two CEOs in a year is notable for a company that considers itself in the first inning of growth,” the analysts wrote, adding that the shift comes as growth dynamics begin to soften.
Jefferies remains skeptical about the company’s long-term addressable market, stating that “the total addressable market of ONON is not as big as the market thinks,” and warning that growth is likely to slow while margins come under pressure.
The firm continues to see downside risk to the stock, with its price target of $30 implying downside at the time of writing. Shares fell almost 12% to $35 on Wednesday.
Channel checks suggest underlying demand may already be weakening. While wholesale sell-in remains solid, the analysts noted that rising markdowns point to slowing sell-through, which could weigh on future orders. “On this basis, we see a sales/earnings miss next year in calendar 2027,” they wrote.
Signs of softening are also emerging in direct-to-consumer performance, according to Jefferies, which highlighted increased spending on paid search as a potential indicator that organic customer growth is slowing.
Regionally, growth in the Americas, particularly the US, is decelerating, with sales up about 13% in 2025, a sharp slowdown from the prior year. Jefferies cautioned that if the US market turns negative, gains in regions like China may not be enough to offset the decline.
The firm was also dismissive of On’s apparel segment, describing it as “a nothing burger” given its small contribution to revenue and limited growth potential due to premium pricing and technical positioning.
Competitive pressures are expected to intensify, especially as Nike regains momentum. “They are back,” the analysts wrote, pointing to the company’s scale in marketing and research and development as key advantages that could make it harder for On to sustain market share gains.
Jefferies also flagged elevated product risk, noting that the brand’s distinctive design language could become a liability if consumer preferences shift.
“ONON is a fashion play. This means product breadth appears relatively narrow and fashion trend shifts can have a disproportionate negative impact,” the analysts wrote.
“Bottom line, we see parallels with brands such as K-Swiss or Puma = brands that, historically, have had a niche, then a star moment, then fade,” the analysts concluded.