On Holding AG, the Swiss performance running brand, reported first-quarter revenue and profit that surpassed Wall Street forecasts and raised its full-year profit outlook.
The company continued its strong growth trajectory this quarter, although its direct-to-consumer revenue, comprising online and physical store sales, fell short of market expectations. Shortly before the quarter's end, On announced that CEO Martin Hoffmann would step down, with co-founders David Allemann and Caspar Coppetti assuming the roles of co-CEOs.
For the quarter ended March 31, On's direct-to-consumer revenue grew 16.4% year-over-year to CHF 322.3 million (approximately USD 414.2 million), according to data from StreetAccount. This figure was below the analyst consensus of CHF 326 million.
Conversely, revenue from its wholesale channel, which carries a relatively lower margin, increased by 13.3% to CHF 509.6 million, exceeding market expectations of CHF 499 million.
The company stated in its announcement that it has decided to raise its profit guidance for the year while maintaining its 2026 net sales growth forecast, despite an uncertain macroeconomic environment.
Co-CEO Caspar Coppetti, in an interview, remarked, "This isn't primarily driven by the consumer... There are all sorts of external shocks, like the war in Iran, which nobody predicted. You could say our brand operates in a somewhat insulated space because our customer base consists largely of higher-income, quality-focused consumers whose demand is largely unaffected by factors like oil price fluctuations."
On now expects its 2026 gross margin to be at least 64.5%, up from a previous expectation of 63%. The company's profit outlook continues to factor in a scenario with a 20% U.S. import tariff on goods from Vietnam, despite a U.S. Supreme Court ruling earlier this year that invalidated the tariff. Potential tariff refunds from this ruling were not included in the forecast.
Coppetti noted that the company has applied for tariff refunds but continues to plan based on the 20% tariff due to ongoing uncertainty and concerns that tariffs could be re-imposed. He added that even if tariff policies were relaxed, the impact on the company's overall performance would be minimal.
The company raised its adjusted EBITDA margin guidance to a range of 19.5% to 20%, up from the previous range of 18.5% to 19%.
According to an analyst survey by LSEG, the luxury sportswear brand's actual first-quarter results compared to market expectations were as follows:
Adjusted earnings per share: 37 Swiss centimes vs. an expected 27 centimes. Total revenue: CHF 831.9 million vs. an expected CHF 823 million.
The company reported a first-quarter net profit of CHF 103.3 million, or 31 centimes per share, compared to CHF 56.7 million, or 17 centimes per share, in the same period last year.
Total quarterly revenue increased to CHF 831.9 million, a 14.5% rise from CHF 727 million a year ago.
Amid a gradual slowdown in the brand's high-growth momentum and waning confidence from some investors, On's significant revenue growth this quarter may help regain investor favor. The stock has declined nearly 27% year-to-date, with some analysts questioning the company's ability to evolve into a true industry giant and achieve widespread popularity from Ohio, USA, to Paris, France.
Coppetti stated that as profitability improves, the company continues to reinvest profits into brand building and growth areas, including its apparel category and emerging sports like tennis. This strategy has shown particular success in China, where sales achieved double-digit growth and apparel penetration reached 30%, compared to a global average of only about 6%.
This stands in stark contrast to Nike, which continues to face pressure in China as consumers increasingly favor local brands and move away from traditional athletic giants.
Coppetti commented, "Chinese consumers are becoming more sophisticated, seeking differentiation and unique experiences. They either choose local brands or prefer international brands with distinct qualities. Our European heritage, Swiss roots, and focus on high quality and meticulous detail resonate well with Chinese consumer preferences."
Just before the quarter ended, On announced a management change: Martin Hoffmann, the Wall Street-recognized CEO, stepped down, with co-founders David Allemann and Caspar Coppetti taking over as co-CEOs.
Hoffmann, who served as CEO since 2021, shared leadership with Marc Maurer for much of his tenure and had been the sole CEO for less than a year before this latest executive reshuffle.
The company's announcement characterized Hoffmann's departure as a planned sabbatical, stating he would pursue philanthropic interests. His exit coincides with a period of increasing business complexity for the company.
Coppetti stated that On has always been founder-led since its inception and that the company's overall strategy will not undergo significant changes with the founders now serving as co-CEOs.
"Strategically, it's business as usual. We will continue our premium brand strategy, balancing ambitious expansion with the conservative, steady approach of a Swiss company."
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