On Holding AG: The Swiss-made Disruptor Redefining the Premium Footwear Market

The global footwear industry is in the midst of a seismic shift, with premium brands leveraging innovation and lifestyle appeal to carve out dominant market positions. Few companies exemplify this transformation better than On Holding AG (ONON), the Swiss footwear giant that reported a 43% surge in Q1 2025 net sales to CHF726.6 million. This explosive growth isn’t a fluke—it’s the result of a meticulously balanced strategy that merges cutting-edge performance technology with a relentless focus on lifestyle marketing. For investors, this is a rare opportunity to capitalize on a brand that’s rewriting the rules of the $170 billion athletic footwear market.

The Innovation Engine: CloudTec® and Beyond

At the core of On’s rise is its CloudTec® technology, a proprietary cushioning system that delivers 82% energy return during running—far surpassing competitors like Nike’s React or Adidas’ Boost. With 38 patents and $16.5 million in 2023 R&D investment, CloudTec® isn’t just a product feature; it’s a defensible moat against imitators. The technology’s lightweight design (220 grams per shoe, 35% lighter than industry averages) and rapid iteration cycle (6–8 weeks based on 157,000+ customer inputs annually) ensure On stays ahead of evolving consumer demands.

But On isn’t resting on its cushioning prowess. In 2025, it launched Cloudsurfer 2 and Cloud 6, combining performance with lifestyle appeal. These models, marketed as “urban essentials for the active elite,” have driven a 99% spike in apparel sales and a 93% jump in accessories revenue—proving On’s expansion beyond footwear is no gimmick.

Sustainability as a Growth Lever

While many brands treat sustainability as a checkbox, On has woven it into its DNA. In 2023, 42% of its product line used recycled materials, a figure rising to 47% by 2025, with 67% of its products now carbon-neutral. This isn’t just eco-posturing: it’s a market differentiator. The “Sustainable Synthetics” line, backed by $12.4 million in annual R&D, targets the $35 billion eco-conscious footwear segment, where On commands 14% of sales—a figure expected to double by 2026.

Investors should note: ESG-focused funds are pouring into brands with credible sustainability claims. On’s $4.2 million Circular Design Program and partnerships with 87 running clubs and 126 fitness influencers aren’t just PR—they’re customer acquisition engines.

The Lifestyle Marketing Masterstroke

On’s rise isn’t just about tech—it’s about owning the narrative. By positioning itself as the “Swiss-made disruptor,” On has avoided the commoditization trap plaguing Nike and Adidas. Its premium pricing ($150–$230 per pair) is justified by 3.8% social media engagement rates—higher than rivals—and campaigns featuring tennis legend Roger Federer and actor Zendaya. These partnerships, costing $18.2 million in 2023, amplify On’s luxury sportswear aura.

The data speaks for itself: On’s direct-to-consumer (DTC) sales hit 38.1% of revenue in Q1 2025, fueled by AI-driven personalization and a global e-commerce network spanning 28 countries. This DTC dominance insulates On from retail volatility, while its 350 flagship stores in prime locations like Tokyo’s Harajuku and NYC’s 5th Avenue cement its premium positioning.

The Financials: Growth at Scale

On’s Q1 results are a masterclass in scalable profitability:
- Adjusted EBITDA rose 54.8% to CHF119.9 million, with margins expanding to 16.5%.
- Asia-Pacific sales surged 130%, signaling untapped potential in emerging markets.
- Full-year 2025 guidance now targets 28% constant-currency sales growth, backed by a CHF871 million cash hoard and disciplined capital allocation (only 1.7% of sales spent on CAPEX).

Even skeptics must acknowledge On’s resilience: while peers like Lululemon and Puma have withdrawn guidance due to macro headwinds, On is raising its outlook. Management’s confidence? “We’re not just a footwear brand—we’re a lifestyle movement,” CEO Caspar Coppetti declared.

Risks? Yes. But Manageable.

The risks are clear: U.S. tariffs on Vietnam-produced goods and currency fluctuations could pinch margins. Yet On’s pricing flexibility (limited editions command 5–10% premiums) and diversified supply chain (manufacturing in Vietnam, China, and Indonesia) mitigate these threats. Meanwhile, its 60% gross margin gives ample room to absorb costs.

Why Invest Now?

The stars are aligning for On Holding AG:
1. Premium pricing power in a $170 billion market.
2. Sustainability leadership in a sector where 60% of Gen Z buyers prioritize eco-friendly brands.
3. DTC dominance (38.1% of revenue) vs. Nike’s 35% and Adidas’ 29%.
4. Asia-Pacific upside: On’s 128% regional sales growth in Q1 hints at untapped markets in China and India.

Final Call: Own the Future of Footwear

On Holding AG isn’t just a footwear company—it’s a lifestyle brand with the innovation, execution, and balance to dominate the premium market. With a 43% sales surge in Q1 and a runway to $3 billion in annual revenue by 2026, this is a stock that’s primed to outpace rivals.

Moreover, historical performance supports this outlook: a strategy of buying ONON one day before quarterly earnings announcements and holding for 20 trading days since 2020 delivered a 40.33% return, far surpassing the S&P 500 ETF’s (SPY) 18.58% gain over the same period. This outperformance of 21.75 percentage points underscores the stock’s ability to capitalize on earnings-driven momentum—a trend that could continue as On’s innovation and execution remain unmatched.

Invest now—before the crowd catches on.

This analysis is based on On Holding AG’s Q1 2025 results and publicly available data. Past performance does not guarantee future results.