On Holding AG's 2025 Q2: Navigating Contradictions in Margins, Inventory, and Growth Expectations

Gross margin outlook, inventory and supply chain management, apparel growth expectations, market growth and momentum, and reaction to macroeconomic uncertainties are the key contradictions discussed in On Holding AG's latest 2025Q2 earnings call.



Revenue Growth and Strategic Momentum:
- On Holding AG reported net sales of CHF 749.2 million for Q2 2025, up 38% on a constant currency basis, surpassing expectations.
- This growth was driven by the company's premium positioning, which enhanced gross profit margin to 61.5% and adjusted EBITDA margin to 18.2%, along with strong performance across regions and product categories.

Product and Channel Resilience:
- The company's resilience was evident across its product portfolio, with 9 distinct footwear franchises each contributing more than 5% to the top line, supported by the debut of new products like the Cloud 6 and the successful Cloudtilt collaboration with LOEWE.
- This resilience was further bolstered by a balanced channel strategy, leveraging both wholesale and direct-to-consumer channels, with the DTC mix reaching 41.1% of sales.

Apparel Business Expansion:
- On's apparel business delivered an impressive 75.5% growth in net sales at constant exchange rates, with sales reaching CHF 36.7 million.
- The expansion was driven by increased consumer engagement and the addition of apparel to customer baskets, supported by strategic partnerships and marketing initiatives.

Global Market Performance:
- The APAC region experienced 110.9% year-over-year growth at constant currency in Q2, with significant contributions from markets like Greater China, China, and Japan.
- This growth is attributed to strong demand outpacing supply, strategic retail expansion, and improvements in operational capabilities.