In 2025 On sold CHF 3.01bn of shoes, apparel and accessories — up 30% (and 36% in constant currency) — at a 62.8% gross margin, and called itself the brand building “the world's most premium global sportswear”[1][31]. In Q1 2026 it posted its first quarter above CHF 800m and grew net income 82%[5].

And yet the stock fell roughly 36% over the year to June 2026 and still trades near 40× trailing earnings — the richest multiple among Nike, Adidas and lululemon[21][22]. The genuinely open question is not whether On is a good brand — the growth and margins say it is — but how big and how durable it can become: whether a running specialist that is ~93% shoes[4], made in Asia under a Swiss flag[25], on its second CEO change in a year[12], is a premium compounder or a hot streak the multiple has front-run. On the evidence assembled here, the operating story leans genuine — the 2025 profit dip is a disclosed FX swing, not a weaker engine[2] — while the size question stays genuinely contested: apparel and accessories are still only ~7% of sales[4] against +68%/+124% growth[23]. Each section states where its evidence leans; the closing weighing in the Peer Comparison shows the work.

The decisive questions

Each links to the section that lays out the evidence on both sides.

Five years of net sales

Net sales, CHF bn, fiscal years ending December. FY2025 is reported; FY2021–FY2024 are On's reported annual results[1]. Sales quadrupled in four years — among the fastest scaling of any premium sportswear brand — though the reported-currency growth rate is now cooling from triple digits to ~30%.

How to read this

Nine sections, each built the same way: a neutral synthesis, a two-sided case-for / case-against ledger, sourced data and charts, and dated facts — including Swiss-German sources for the domestic view. Start with the question that interests you, or read in order from the Overview.

On's origin is a single product insight: CloudTec, the hollow rubber pods on the sole that promised a soft landing and a firm push-off[8]. Everything else — the premium price, the Federer halo, the Swiss identity — was built on top of that running shoe, which is still ~93% of the business[4].

The three founders — Olivier Bernhard (a former Ironman champion), David Allemann and Caspar Coppetti — launched On in Zurich in 2010[8]. The brand's inflection came in November 2019, when Roger Federer — “the probably most famous Swiss person” — invested around $50M for a roughly 3% stake and became a collaborator, turning On from a running brand into a lifestyle one[9][20]. The September 2021 NYSE IPO valued On at ~$7.3bn and jumped 46% on day one, making Federer's stake worth roughly $300M[10].

The timeline

In fifteen years On went from a prototype to CHF 3bn in sales and a global brand — a rapid scaling story. The rest of this study asks the harder question: is the next CHF 3bn as easy as the last, and is it already in the price?

The sportswear market did not suddenly grow; it rotated. Consumers traded down from a tired Nike and up into design-led premium brands. On and Hoka were the two biggest winners — a tailwind that is also a reminder of how quickly taste moves.

The incumbent stumble

Nike — many times On's size — reported a Q4 revenue decline of 1.7%, its slowest sales gain in 14 years, and On and Hoka emerged as the largest share-gainers in running behind it[16]. Swiss business press framed it as “David versus Goliath”: newcomers like On and Hoka chasing market share from Nike, Adidas and Puma[50], taking ever more retail shelf space from the giants[51].

Big prize, big gap

On passed $3bn-equivalent in annual revenue for the first time[38] — a milestone, but still a fraction of Nike (~$53bn cap) or Adidas (~$29bn)[22]. That gap is the bull case (years of room to grow) and the bear case (the easy share has been taken, and premium-running fashion is fickle). Bears point to a recurring pattern in footwear: a niche brand has a star moment, then fades[34].

On's market is large and its tailwind real — Nike's weakness handed premium challengers years of share. The debate is whether that share is structural (a durable brand shift) or cyclical (a fashion moment that mean-reverts when the giants recover or taste rotates again).

On wants to be, in its own framing, “the Rolex of sportswear.” The economics follow from that ambition: charge a premium, sell more of it directly, keep production asset-light in Asia, and let the gross margin compound.

Premium pricing, premium margin

On's best-selling shoes are mostly priced above $150, with high-end products above $300 (and limited luxury sneakers around CHF 445)[18][47]. That premium, anchored by the patented CloudTec design, underpins a gross margin that reached 62.8% in 2025 (up from 60.6%) and a 21.0% adjusted-EBITDA margin in Q1 2026[39][5]. On calls CloudTec “the most concrete example of product differentiation that justifies the premium price — not just a marketing gimmick”[44].

Channel mix: wholesale today, DTC tomorrow

FY2025 net sales by channel, CHF m. Wholesale is still the majority, but DTC (now ~42% of sales) is growing faster (+34% / +40% cc) and carries more brand control and margin[4].

Geography: US-heavy, Asia-accelerating

FY2025 net sales by region, CHF m. The Americas is still the largest market, but APAC grew +96%(+107% cc) and is the engine of the next leg[3].

On's model is genuinely premium and genuinely profitable — a ~63% gross margin most footwear brands cannot touch. The concentration is the catch: ~93% shoes, a US-heavy base, and production entirely in Asia under a Swiss flag — efficient, but exposed on category, currency and trade.

A 62.8% gross margin is not an accident of cushioning foam — it is brand. On's central bet is that a design-led, athlete-anchored, selectively-distributed brand can command premium prices without discounting. The single biggest input to that bet was Roger Federer.

The Federer effect

When Federer — “the probably most famous Swiss person” — invested in 2019 and became a collaborator, On “became not just a sports brand but stood for a lifestyle”[20]. He helped push On into tennis and raised its global profile far beyond running[9]. The financial signal was loud: his ~$50M stake was worth ~$300M at the IPO and made him a billionaire as On compounded[9].

Brand-led, not discount-led

On's marketing model resembles Nike's and lululemon's more than a value brand's: elite-athlete partnerships, design-led product, selective distribution and a growing DTC channel to control the brand experience[44][19]. The payoff is pricing power — luxury sneakers at CHF 445, a 63% margin, and a “Rolex of sportswear” ambition[47].

Brand is the engine behind every number in this study — the margin, the pricing, the lifestyle reach. It is also the hardest thing to underwrite: a halo built on a once-in-a-generation athlete and a fashion moment is real but not guaranteed to renew.

The dependency risk

The same brand strength is a dependency. Skeptics note On leans heavily on hype and a “Swiss-engineered” halo even though production is entirely Asian — a narrative they see as vulnerable if the trend cools or the Swissness claim is challenged[46]. And a brand built partly on one retired athlete must prove it can sustain desirability without manufacturing a second Federer.

On's competitive position is a study in contrasts: clearly winning against the other premium-running challenger, clearly out-scaled by the incumbents, and competing in a category where the durable advantage is the hardest thing to measure — brand.

On vs Hoka: the challenger derby

On and Hoka were “once considered analogous counterparts” but now “look like completely different businesses”[17]. On is growing faster (FY2025 ~+30% to CHF 3bn versus Hoka's ~+23.6% to ~$2.2bn), and the gap is starkest in DTC: On's direct sales grew ~37.5% versus Hoka's ~8% in a comparable quarter — more brand control and more margin for On[41][17]. Deckers' shares fell on weaker Hoka growth, underlining the divergence[17].

...and the giants

Against the incumbents the scale gap is enormous: Nike (~$53bn cap) and Adidas (~$29bn) are many times On's size, with vastly larger marketing budgets, apparel businesses and distribution[22]. On competes across running, outdoor, training, tennis and lifestyle, and increasingly with lululemon in premium apparel[32]. The bet is that premium, design-led focus beats scale in the segments On chooses — but Swiss press cautions that “the competition is not sleeping”[47].

Five Forces — premium athletic footwear

Click each force for the evidence behind the rating.

Positioning: breadth vs premium

Horizontal = how broad the model is (running specialist → full sportswear platform); vertical = brand/pricing premium. Hover a player for the basis. Placements are qualitative, from the cited evidence.

On occupies a defensible niche — the premium, design-led running specialist — and wins it against Hoka. Whether that niche is a launchpad to a broad platform or a ceiling is this study's most contested question — within this section's evidence the head-to-head leans On's way (DTC +37.5% vs Hoka's ~8%[41]), but launchpad-vs-ceiling is settled by the category mix, not the derby: see Growth Vectors and the closing weighing in the Peer Comparison.

On's bulls and bears agree on the data and disagree on what it means. Apparel, accessories and APAC are growing at breakneck rates — but from a base so small that they barely move the ~93%-shoes mix yet. The question is whether these become the second engine or stay rounding errors.

FY2025 growth by vector

FY2025 year-over-year growth, constant currency where shown, %. Newer categories and APAC grow far faster than the shoe core — but off small bases[23][3][4].

The three vectors

• Category: apparel grew +68% (CHF 169.9m) and accessories +124% (CHF 39.6m) in 2025 — but together they are still only ~7% of sales[23][4].
• Geography: APAC net sales grew +96% (+107% cc) and EMEA +32%, against a US-heavy base — a long international runway[3].
• Channel & retail: DTC grew ~+40% cc to ~42% of sales, supported by 50+ owned stores and flagships in New York, Los Angeles and Tokyo[4][35].

Management says it expects DTC, APAC and apparel to outperform, and raised full-year targets again on strong demand “despite price increases”[58] — a sign pricing power held into 2026.

The growth vectors are real and fast — but small. The bull sees a multi-engine platform forming; the bear sees a running-shoe company whose new categories are too small, too soon to justify a ~40× multiple. On today's mix the bear reads the present more accurately — at ~7% of sales, apparel and accessories cannot yet carry the thesis[4] — while the bull owns the trajectory: +68%/+124% category growth and APAC's +107% cc say a second engine is forming[23][3]. The platform read wins only if the non-shoe share keeps compounding toward double digits.

Read On's income statement in constant currency and it shows ~36% constant-currency growth at an expanding margin. Read it as reported, in a strong franc, and the headline net income actually fell in 2025. Both are true — and the gap is the single most important thing to understand about On's financials.

The headline figures

• FY2025: net sales CHF 3,014.0m (+30.0% reported / +35.6% constant currency), gross margin 62.8%, adjusted EBITDA CHF 567.0m (+46%, 18.8% margin), cash CHF 1,019.9m[1][39].
• Net income fell 15.9% to CHF 203.7m — not on weaker operations but on a CHF 173.2m foreign-exchange loss (versus a CHF 67.7m FX gain the year before)[2].
• Q1 2026 (record): net sales CHF 831.9m (+14.5% / +26.4% cc), gross margin 64.2% (+430bps), net income CHF 103.3m (+82%), adjusted-EBITDA margin 21.0%[5].

The FX distortion

Net income and the role of foreign-exchange swings. On reports in Swiss francs — one of the world's strongest currencies — so a year of franc appreciation turns strong constant-currency growth into softer reported numbers and a large FX loss[2].

Running the FX-neutral number

A simple bridge — this study's own arithmetic, labeled illustrative — shows how much of the profit story is currency. Method: take reported net income and strip the disclosed FX result from each year. FY2025 booked a CHF 173.2m FX loss; FY2024 a CHF 67.7m FX gain[2]. FX-neutral, FY2025 net income would be roughly CHF 203.7m + 173.2m ≈ CHF 377m, against an FX-neutral FY2024 of CHF 242.3m − 67.7m ≈ CHF 175m — an illustrative ~+116% underlying increase, versus the −16% reported decline[2]. The same FX line that makes 2025 look weak made 2024 look strong. (Derived figures ignore any tax effect on the FX result and are this study's computation, not an On disclosure.)

Margins and guidance still rising

The operating engine kept improving: gross margin expanded from 60.6% to 62.8% and is guided to ≥64.5%, with adjusted-EBITDA margin guided to 19.5–20.0% for 2026[6]. On reaffirmed and raised guidance to ≥23% constant-currency growth (≥CHF 3.51bn reported), and Swiss media noted the shares were “in demand” on the strong start and raised outlook[6][54].

On's operations are firing — 30%+ growth, record margins, CHF 1bn+ of cash. The bear case isn't that the business is weak; it's that a strong franc, a decelerating Americas, and a ~40× multiple mean the stock can fall even as the income statement sets records[7][42].

This section skews critical by design — it gathers the bear case in one place. Read it against the strengths in the other sections; On's defenders have answers to most of it, and those are here too.

The bear thesis: a smaller TAM than the market thinks

Jefferies' Randal Konik makes the sharpest version: On's addressable market “is not as big as the market thinks, so growth will slow, margins will compress, and the stock price will decline substantially,” drawing parallels to K-Swiss and Puma — niche brands that had “a star moment, then fade”[13][34]. He flags a US/Americas slowdown (USA growth of only ~13% in 2025) and warns “if USA goes negative in '27, it doesn't matter what growth occurs in China,” and that a “DTC slowdown may already be happening”[14].

Leadership churn

On is on its second CEO change in roughly a year. Co-CEO Marc Maurer left in 2024; now CEO/CFO Martin Hoffmann is exiting after 13 years as co-founders Allemann and Coppetti take over “amid slowing growth”[12]. William Trading's Sam Poser cut his price target ($44→$41), doubting On has the “ground game” to execute across wholesale accounts[36]. The bull counter: On frames it as putting product-obsessed founders back in charge to “lead On's next chapter,” and Baird called the COO promotion a “key positive”[55][15].

The Swissness controversy — “Lex On”

On is a Swiss brand that produces exclusively in Asia (chiefly Vietnam and Indonesia) yet has put the Swiss cross on shoes sold abroad for years. To keep doing so, it fought Swiss authorities and — per NZZ — threatened the Institute for Intellectual Property with a state-liability lawsuit, prompting a rule change critics dubbed the “Lex On”[25][28].

On won — revised rules now let it use the cross if core development happens in Switzerland[56]— but the victory drew sharp domestic criticism. Rival Swiss shoemaker Künzli and Magdalena Martullo threatened legal steps, arguing the precedent lets firms with no real Swiss link use the cross, damaging Switzerland's image and disadvantaging domestic producers[27][29]. Galaxus put it bluntly: the laws were “softened” for On[26].

Tariffs and the franc

On's Asian manufacturing exposes it to US tariffs, while reporting in a strong Swiss franc depresses reported sales and profit relative to constant-currency growth — a double trade-and-currency headwind that hit 2025 net income via a CHF 173.2m FX loss[43][2].

None of these has dented On's profitability — and it won the Swissness fight. But together they explain the gap between record results and a falling stock: a business whose growth durability, cost base, brand narrative and reported profit are all, in different ways, contestable.

Valuation is where On's debate concentrates. On grows faster than any of its scaled peers, but it also carries the highest trailing multiple of the group — even after a ~36% share-price fall. Figures are point-in-time (early June 2026).

Market capitalization (June 2026)

US$B, early June 2026. On highlighted. On is the smallest of the four — a fraction of Nike — which bulls read as runway and bears as a brand that has yet to prove platform scale[21][22].

Valuation: trailing P/E

Trailing price-to-earnings, early June 2026. On trades at ~40× — well above Nike (~28×), Adidas (~20.5×) and lululemon (~9×) — the premium the whole debate is about[21][22].

How they stack up

Sources: On figures[1][5]; peer caps and multiples[21][22]. Nike/Adidas/lululemon gross margins are approximate and for context. All multiples are point-in-time and move daily.

What the price assumes

As of 5 June 2026, On traded at $37.08 — a $12.27bn market cap on ~39.7× trailing and ~20.3× forward earnings, after a 36% one-year fall[21]. The gap between the two multiples is itself a forecast: $12.27bn ÷ 39.7 implies roughly $0.31bn of trailing earnings, ÷ 20.3 roughly $0.60bn forward — the market is pricing earnings to roughly double within a year (illustrative arithmetic from the cited multiples). That is less heroic than it sounds: most of the doubling is the expected non-repeat of the CHF 173.2m FX loss plus On's own guided ≥23% cc growth at a ≥64.5% gross margin[2][6]. Against its own history, a $12.27bn cap is ~1.7× the ~$7.3bn 2021 IPO valuation after sales roughly quadrupled[10][1] — the multiple compressed even as the business compounded. The read: at ~20× forward — close to Adidas's trailing multiple[22] — the price assumes On delivers its guidance but pays little scarcity premium beyond it. That guided ≥23% cc bar, against +35.6% cc trailing[1], is the bar both bull and bear are measured against — an assumption embedded in the price, not a call on the stock.

The peer frame is the whole thesis: On is the fastest grower with the best margin trajectory and the most expensive multiple. Bulls say superior growth earns the premium; bears say a ~40× stock that already fell 36% has more room to derate if growth slows[42][57].

German-language analysts capture both sides: some call the share-price drop “a buying opportunity” given On's growth and margins[57]; others flag the “high valuation on the NYSE” as a recurring overhang[53]. Price targets cluster in the low-to-mid $40s, modestly above the ~$37 price[36][45]. Rather than leave that split hanging, here is where this study comes down on each of its four decisive questions — the evidence that controls each call, the strongest survivor on the other side, and the tripwires that would change the reading.

The weighing

On “record results, falling stock — which is right?”: the evidence leans toward the results — the operations are genuinely strong, and the stock fall reads as a valuation reset rather than a business signal (high confidence on the first half, medium on the second). The controlling evidence is the record Q1 2026 — net income +82%, gross margin 64.2%, guidance raised[5][6] — and the fact that the FY2025 profit decline traces to a disclosed CHF 173.2m FX loss, not operations[2], which outweighs the bear's reported-numbers reading because the FX swing is non-operating and symmetric (2024 enjoyed a CHF 67.7m gain on the same line). The strongest surviving counter-argument: the Americas — On's largest region — grew just +3.1% reported (+17.1% cc) in Q1 2026; that deceleration is not all currency[7]. What would flip this reading: Americas constant-currency growth below ~10%, or gross margin below the guided ≥64.5%, at the FY2026 results (due around March 2027)[6]. Pre-mortem: if this looks wrong in two years, the most likely reason is that US demand was genuinely rolling over beneath the FX noise — or, on the other side, that APAC's +61% cc growth[7] replaced US momentum faster than the bears allowed.

On “durable platform or niche on a hot streak?”: the evidence is contested — and the deadlock is specific. Apparel and accessories grew +68% and +124% in 2025[23] yet remain only ~7% of sales[4]; both facts are true, and each side's case rests on one of them. Jefferies' TAM thesis, with its K-Swiss/Puma fade precedents[13], is the sharpest bear statement; APAC at +107% cc[3] and targets raised “despite price increases”[58] are the bull's best evidence that the brand travels. What would flip this from contested: non-shoe sales passing ~10% of the mix by the FY2027 report (toward platform), or US growth turning negative in 2027 — Jefferies' own stated tripwire[14] (toward niche). Pre-mortem: in two years the platform camp's likeliest miss is that the easy share off a stumbling Nike was the whole story[16]; the niche camp's, that it anchored on today's ~7% and missed the compounding.

On the Swiss-made-in-Asia halo: the evidence leans contained (medium confidence). The controlling evidence is that On won — revised Swiss rules let it keep the cross[56] — and that record FY2025 and Q1 2026 sales showed no measurable demand damage through the loudest phase of the dispute[1][5], which outweighs the reputational alarm because the criticism is concentrated in the Swiss domestic press while On's growth is led from abroad[29][3]. The strongest surviving counter-argument: NZZ's warning that On “fights for the hearts of the Swiss — and risks losing them”[48], plus the harder, quantified edge of the made-in-Asia model — US tariffs and the franc[43]. What would flip this reading: the threatened Künzli/Martullo legal challenge to the “Lex On” succeeding[27], or tariff and FX costs pushing gross margin below the ≥64.5% 2026 guide[6]. Pre-mortem: the likely miss is treating brand erosion as an event rather than a slow leak — or, on the other side, overweighting a domestic press fight that customers abroad never noticed.

On the leadership churn: the evidence leans warning-noted-but-contained (medium confidence). The controlling evidence is that the first results under the transition were a record quarter with guidance raised[5][6], and Baird called the President & COO promotion a “key positive”[15], which outweighs the instability reading because the operating engine did not wobble through the handover. The strongest surviving counter-argument: CNBC tied the shake-up to “slowing growth”, and William Trading's Sam Poser cut his target on doubts about On's wholesale “ground game”[12][36]. What would flip this reading: another senior-executive exit before the FY2026 report, or a cut to the ≥23% constant-currency guidance at any 2026 quarter[6]. Pre-mortem: the likely miss is reading founder energy into what was managed decline — or, conversely, penalizing a clean, well-telegraphed succession that product-obsessed founders turned into an asset.

Method

Research proceeded by fan-out web search and direct fetching of primary and reputable secondary sources, in both English and German. Every URL cited was opened and read during the run; each claim was transcribed into a structured manifest with a source tier, a confidence level and a stance. The load-bearing figures — On's FY2025 net sales, gross margin, adjusted EBITDA and net income, plus the Q1 2026 results and 2026 guidance — rest on On's own reported results and 6-K/20-F filings[1][5][6]. Peer multiples and market caps are third-party and point-in-time[21][22].

Native-language research

On is a Swiss company, and roughly a third of the sources here are German-language — including On's own German press releases, NZZ, Handelszeitung, Der Bund, 20 Minuten and Galaxus. The Swiss-German sources were essential for the domestic view, particularly the “Lex On” Swissness controversy, which is covered far more candidly in Switzerland than abroad[25][28]. German quotes are shown in the original with English translations. Note that On reports and is covered primarily in English (it is NYSE-listed and files a 20-F), so the home-language share is intentionally lower than for a purely domestic company.

Frameworks used

The analysis applies the Pyramid Principle for the answer-first Executive Summary; Porter's Five Forces for the competitive landscape, each force rated with a sourced basis; a peer-comparables benchmark against Nike, Adidas, lululemon and (in the prose) Hoka/Deckers; a 2×2 positioning map of breadth versus premium; and an even-handed SWOT woven through the sections. BCG, Ansoff and 7S were skipped — On does not disclose clean segment-level economics to fill them honestly.

Disclosed vs. estimated

Disclosed, high-confidence figures — FY2025 and Q1 2026 net sales, margins, adjusted EBITDA, net income, regional and channel splits, and 2026 guidance — come from On's reported results, in Swiss francs. Estimated or third-party figures include: Roger Federer's ~3% stake and its value; the ~$150/$300 price points; peer market caps, P/E multiples and gross margins; the FY2021–FY2024 net-sales series (On's reported annual results, used as chart context); and all USD figures, which are point-in-time conversions of a CHF-reporting company.

Neutrality & independence

This is a weighed compilation, not advocacy. Every section pairs the case for and against with sourced evidence; the Executive Summary states where the evidence leans and with what confidence, and the Peer Comparison closes with an explicit weighing — leans, surviving counter-arguments and checkable tripwires. All of it stops short of a buy/sell call. The Teardown is independent and not affiliated with On Holding AG, and this is not investment advice — no rating, price target, or recommendation to buy or sell any security. The achieved evidence mix (see the Sources) is deliberately balanced between supporting, critical and neutral citations, with substantial Swiss-German coverage.

Cross-checked at build time by an automated link checker. A few primary and paywalled sources (SEC EDGAR, NZZ) bot-wall automated fetchers; the equivalent figures here are taken from On's own results releases and reputable coverage, which were fetched and read. See Methodology & Limits.