Premium shoes, premium expectations
- Management expects 2026 constant currency net sales growth in the low 20s, a slight downgrade due to wholesale pressure.
- Full-year gross margin is expected to reach at least 65%, driven by higher pricing and direct sales.
- Direct-to-consumer sales hit a record 45.7% of sales in Q2 2026, offering better margins and control.
- A promotional U.S. wholesale market forced On to intentionally limit sell-in to protect full-price integrity.
- Currency swings, potential tariffs, and high valuation expectations remain the biggest ongoing risks to the stock.
A hot brand with a high bar
The bull case is simple. On has exceptional brand momentum and pricing power. Average selling prices have expanded from about USD 145 at IPO to more than USD 170. Direct-to-consumer sales reached 45.7% of total sales in Q2 2026, allowing management to raise gross margin expectations to at least 65 percent.
The bear case focuses on external headwinds dulling the bottom line. Currency volatility continues to obscure true profit performance. U.S. tariffs remain an active risk. Most recently, slower sell-through in a promotional U.S. wholesale market forced management to lower 2026 constant currency sales growth guidance to the low 20s.
The next big tests will shape the long-term story. Investors will watch whether LightSpray production efficiencies can continue to expand margins, and whether new product cycles like the Cloudsurfer 3 with Surreal foam can maintain consumer interest. The September 2026 Investor Day will be critical for setting 2030 targets.
Premium price, tighter control
On makes money by selling premium shoes, apparel, and accessories. It sells through wholesale partners like sporting goods stores, and through its own websites and stores. Direct-to-consumer sales reached a record 45.7% of total sales in Q2 2026.
Direct sales matter because On owns more of the customer relationship. It can show the full brand, gather more data, and keep more of the selling price. This control is helping push 2026 gross margin expectations to at least 65 percent.
The wholesale channel is getting more difficult. A highly promotional multi-brand marketplace in the Americas has led On to intentionally limit sell-in to protect full-price integrity. This protects the brand but limits near-term revenue growth.
The company is also changing how some shoes are made. LightSpray uses automated robotic spray technology to shift production from operating costs to capital spending. This can improve margins and speed if factories run well.
Shoes lead, apparel recruits
Performance footwear
Shoes are the core business. Key franchises include Cloud, Cloudmonster, Cloudsurfer, and all-day styles like Cloudtilt.
Apparel
Apparel is scaling rapidly as a stand-alone growth pillar and acts as a key entry point, driving 10% of new customer acquisition.
Tennis and Roger franchise
The Roger franchise gives On a bridge from running into tennis and premium lifestyle wear, reaching shoppers beyond core runners.
LightSpray shoes
LightSpray is On's advanced manufacturing bet. Products like Cloudmonster 3 LightSpray could improve speed, reduce waste, and expand margins.
Cloudsurfer 3
Debuting in October 2026 with Surreal foam and CloudTec, this launch will test whether On can keep turning innovation into full-price demand.
Americas funds the push
The mix below uses fiscal 2025 geographic net sales from the 2025 Form 20-F. In Q2 2026, Americas growth slowed to 13.0% due to wholesale drag, while APAC and EMEA continued rapid expansion.
What could trip On
Currency hides the real profit trend
High impact · High oddsOn reports in Swiss francs but sells globally. In 2025, gross margin improved to 62.8%, yet net income fell 15.9% to CHF 203.7 million. A strong Swiss franc can make solid operating progress look weaker at the bottom line.
Wholesale promotions drag on growth
High impact · High oddsA highly promotional environment in the Americas wholesale channel has forced management to intentionally pull back sell-in. If competitors discount heavily, On must choose between sacrificing sales volume or hurting its premium brand image.
U.S. tariffs outpace price increases
High impact · Medium oddsManagement said 2026 gross margin guidance of at least 65% absorbs a 20% U.S. tariff rate. If tariffs rise beyond that, On may need more price increases or accept lower margins. If tariffs settle near 10% to 15%, guidance could see upside.
LightSpray scaling misses
Medium impact · Medium oddsLightSpray changes the cost base toward more capital spending. The company is scaling capacity 30-fold. If this ramp faces quality, yield, or demand issues, the margin benefits may take longer than investors expect.
In one breath
What does On Holding sell?
On sells premium performance footwear, apparel, and accessories. Running shoes are the core, but the company is growing in apparel, tennis, training, outdoor, and lifestyle products.
Why do investors care about On's direct-to-consumer sales?
Direct-to-consumer sales include On's websites and owned stores. They reached a record 45.7% of sales in Q2 2026, giving On more control over pricing, brand experience, and margins.
What is LightSpray?
LightSpray is On's automated robotic spray technology for making shoe uppers. Management says it uses fewer parts, cuts CO2 emissions by 75%, and allows production to happen closer to demand.
What is the biggest risk for ONON stock?
The biggest risk is that the stock price expects perfect execution. Currency swings, U.S. tariffs, or a highly promotional wholesale environment could cause growth to miss expectations.
Sources and research notes
This page combines Finn's company research with public filings and other cited materials. The thesis is reviewed when material company information changes; Finn Scores use the latest available scoring data.
- Thesis reviewed
- August 30, 2026
- Score data
- September 27, 2026
- Reviewed by
- Shivam Bharuka
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