Shares in On Holding AG jogged higher in New York pre-market trading after the Swiss sportswear brand backed by Swiss tennis legend Roger Federer reported record first-quarter sales and raised its profit margin outlook after making further progress in Asia and in clothing.
Net sales rose 14.5% to 831.9 million Swiss francs (CHF) in the three months to 31 March, marking the first time the company has exceeded CHF800 million in quarterly revenue. On a constant currency basis, sales growth was 26.4%.
Growth was driven by strong demand across both direct-to-consumer and wholesale channels, with direct sales rising 16.4% to CHF322.3 million.
Asia-Pacific was the fastest-growing region, with sales up 44.4% to CHF174 million, supported by momentum in China and South Korea. The region now accounts for more than 20% of group sales.
Apparel sales increased 45.1% to CHF55.3 million, while accessories revenue jumped 70.7%.
Gross profit margin improved to 64.2% from 59.9%, despite higher US tariffs, and net income climbed 82.2% to CHF103.3 million.
On said it continued to benefit from full-price selling and operational efficiencies, alongside demand for new products including the LightSpray Cloudmonster 3 Hyper and Cloudtilt Remix.
The company reiterated guidance for at least 23% constant currency sales growth in 2026 and raised its full-year profitability outlook, now expecting gross profit margin of at least 64.5% and adjusted EBITDA margin of 19.5%-20.0%.
Analyst Patrick Ricciardi at Third Bridge said On's "biggest challenge is maintaining momentum in North America’s wholesale market as Nike pushes aggressively back into the channel", as the US sportswear giant invests heavily to win back shelf space it lost during its earlier shift toward direct to consumer sales.
"Apparel remains one of On’s biggest long term growth opportunities, but also one of its toughest categories to crack," Ricciardi said.
"While footwear innovation has helped define the brand, apparel is harder to differentiate, and consumers still do not strongly associate On with standout clothing products."
The Swiss group's premium positioning supports "some of the strongest margins in the sportswear industry", the analyst said, noting that On rarely discounts products, unlike Nike and other larger rivals like Adidas.
"The next phase of growth will depend on whether On can expand beyond performance running into the broader sneaker lifestyle market. Retailers such as JD Sports and Foot Locker represent a major opportunity, but On still lacks the same visibility and product mix as more established brands in those channels."