On Holding (ONON): A Tariff-Proof Champion in the Footwear Sector – Buy Before the Rally Ignites

The global footwear sector is bracing for a perfect storm of trade tensions, with U.S.-EU tariff delays and retaliatory measures threatening to disrupt supply chains and pricing. Yet within this chaos, one company is emerging as a beacon of resilience: On Holding AG (ONON). Leveraging its premium brand strategy, operational agility, and a fortress balance sheet, ONON is positioned to outperform a beleaguered apparel-shoes group and capitalize on the "buy the dip" opportunity now unfolding.

Tariff Turbulence: Why the Sector is Shaking – But ONON is Steadfast

The EU's delayed footwear tariffs, initially slated for June but pushed to July 9, 2025, have amplified uncertainty for global brands reliant on Asian manufacturing hubs like Vietnam. For companies such as Nike and Adidas, tariffs as high as 46% on Vietnamese imports threaten profit margins, forcing price hikes or margin compression.

But ONON is no ordinary player. The Swiss sportswear giant has engineered a multi-front defense:
1. Premium Pricing Power: Its cloud-tech running shoes (e.g., Cloud 6, Cloudsurfer 2) command a 30-40% premium over rivals, insulating it from cost pressures.
2. Geographic Diversification: While 90% of production is in Vietnam, ONON's Asia-Pacific sales surged 130% in Q1 2025, reducing overreliance on U.S. markets.
3. Operational Precision: A 60.5% gross margin target for 2025 (vs. 60.6% in 2024) underscores its ability to optimize supply chains and offset tariff impacts.

The Bullish Shakeout: Demand is Real – and Investors Are Taking Note

ONON's Q1 results were a masterclass in execution. Net sales soared 43% to CHF 726.6 million, driven by 45% DTC growth and 41% wholesale gains. This outperformance came despite headwinds:
- U.S. Tariff Exposure: ONON sources 90% of goods from Vietnam, which faces a 46% U.S. tariff. Yet its guidance accounts for these costs, with CFO Martin Hoffmann stating, “Our operational excellence and premium positioning give us flexibility to navigate tariffs.”
- Sector-Wide Stumbles: While peers like Nike and Adidas face inventory overhangs and delayed price adjustments, ONON's zero debt and CHF 1 billion cash pile provide a safety net.

ONON's stock has outperformed the sector by 22% since January 2025, despite broader volatility.

Why Now is the Critical Buy Point

The market is pricing in fear, not fundamentals. The EU's delayed tariff deadline creates a golden window for ONON to negotiate trade terms, restructure supply chains, and capitalize on consumer demand for premium performance footwear. Key catalysts to watch:
1. July 9 Tariff Deadline: If the U.S. and EU reach a deal, ONON's shares could rebound sharply, given its sector-leading technical setup.
2. Holiday Season Prep: With $2.86 billion in 2025 sales guidance, ONON is scaling inventories for peak demand, a move analysts call “aggressively prudent.”
3. Margin Resilience: While Yale's Budget Lab predicts 15% footwear price hikes, ONON's DTC dominance (40% of sales) allows it to retain pricing power without alienating buyers.

The Bottom Line: Act Before the Rally

The apparel-shoes sector is in a bearish consolidation phase, but ONON is the exception. Its strong Q1 results, premium brand equity, and strategic tariff hedging make it a low-risk, high-reward bet. With shares trading at 52-week lows and a PEG ratio of 1.8 (vs. sector average of 2.5), the risk-reward is skewed heavily toward upside.

The stock is nearing a breakout above its 50-day MA – a signal to accumulate before the next leg up.

Investors should act now: The tariff storm will pass, and ONON's leadership in innovation and execution will ensure it emerges as the sector's undisputed winner. Delay, and you risk missing the next wave of gains.

Call to Action: ONON is a buy at current levels. Set a target of CHF 35 (20% upside) with a stop below CHF 28. The window to capitalize on this tariff-defying opportunity is narrowing – don't wait for the crowd to catch on.