On Holding’s Earnings Could Sprint Past Expectations — But Tariffs Loom at the Finish Line

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On Holding AG (NYSE: ONON) heads into its second-quarter 2025 earnings release tomorrow morning with high expectations from investors and analysts alike. The Swiss athletic footwear and apparel brand, known for its premium positioning and rapid growth trajectory, has become one of the most closely watched names in the space. While the stock has pulled back sharply—down roughly 25% since late May—analysts remain largely bullish, citing strong brand momentum, global expansion, and a history of execution. Investors will be focused on whether the company can deliver another top-line beat, maintain its high-margin profile, and navigate headwinds such as Vietnam tariffs and FX pressures.

Consensus estimates for Q2 call for EPS of $0.26, up 85.7% year-over-year, and revenue of $871.41 million, representing 53.5% growth. ONON has an impressive track record, having beaten revenue estimates in every quarter over the past two years and topping EPS expectations 88% of the time. However, sentiment heading into this print has been tempered by more downward than upward estimate revisions in recent months, reflecting concerns about valuation, potential wholesale channel softness, and macroeconomic headwinds. Still, the consensus “Strong Buy” rating, 18 buy calls versus 2 holds, and an average price target of $66.11 (nearly 45% upside from current levels) indicate that Wall Street believes the pullback presents an opportunity.

Key items to watch tomorrow will include the pace of top-line growth, particularly in the direct-to-consumer (DTC) segment, which has been expanding faster than wholesale. In Q1, DTC sales grew about four percentage points faster than wholesale, reaching a 38.1% share of sales, while wholesale still accounted for roughly 62%. Sustaining this DTC momentum is important for margins—ONON posted a 59.9% gross margin in Q1—and for brand control. Analysts also expect continued outperformance in the Asia-Pacific region, which surged over 130% year-over-year in Q1, though there are questions about slowing growth in the Americas. Another key theme will be the impact of tariffs, as the U.S. is increasing duties on Vietnamese imports (a core ONON manufacturing hub) from 10% to 20%, representing a potential 150–200 basis point annualized headwind. Management has expressed confidence in mitigating the impact through pricing power and efficiency gains.

ONON’s Q1 results set a high bar. Net sales grew 40% year-over-year on a constant currency basis to CHF 726.6 million, well ahead of consensus estimates, and adjusted EBITDA came in at CHF 119.9 million, topping forecasts by more than CHF 12 million. EPS of CHF 0.17 was slightly below consensus in dollar terms due to FX translation effects. Gross margin expanded by 20 basis points, and adjusted EBITDA margin reached 16.5%. Regional performance was balanced, with growth of 32.7% in the Americas, 33.6% in Europe, and triple-digit growth in APAC. Management raised its full-year constant currency revenue growth outlook to at least 28% from 27%, while maintaining its adjusted EBITDA margin guidance of 17% to 17.5%.

Beyond the numbers, product innovation remains a major driver. The Cloud 6, a new iteration of one of ONON’s most popular running franchises, was soft-launched in Q1 with strong early demand, and is expected to contribute meaningfully to sales in 2H 2025. Apparel, while still a small percentage of the business, grew 77.5% in Q4 2024 and remains a strategic focus area. Management also continues to expand its retail footprint, opening premium stores in high-visibility markets such as Paris and Milan, with further growth planned in Southeast Asia and the Middle East this year.

Looking ahead, ONON has guided for stronger growth in the first half of 2025 versus the second half, reflecting the timing of product launches and sell-in dynamics. Analysts expect growth to slow into the low 20% range in 2H as comparisons become more challenging. Still, with robust order books, expanding shelf space in key wholesale accounts, and rising brand awareness, there is room for upside if demand remains resilient.

From a risk perspective, investors should watch for commentary on consumer demand trends, particularly in North America, where macro pressures and elevated valuations have weighed on sentiment for premium discretionary goods. FX volatility remains a factor given the Swiss franc’s strength, and management has already cited this as a drag on reported profitability. The Vietnamese tariff increase will likely require ongoing pricing and cost management strategies to protect margins.

In summary, ONON’s Q2 report will test whether the company can sustain its remarkable growth trajectory while managing external headwinds. The brand’s combination of premium positioning, global momentum, and product innovation gives it multiple levers for expansion. With the stock trading well below its May highs, a strong print—especially if paired with an upward guidance revision—could reassert ONON’s leadership position in the high-growth athletic footwear segment. But with the market already pricing in perfection for much of the past year, any signs of a slowdown could keep the recovery in shares on a short leash.

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