Sportswear maker On Holding raises annual sales forecast on promotion driven demand

Sportswear maker On Holding (ONON) raised its full-year 2025 net sales forecast to at least CHF 2.91 billion and adjusted EBITDA margin to 17-17.5%, driving a 10% premarket share increase. This upward revision stems from strong brand promotion, product innovation, and high-profile collaborations that fueled robust demand and market share gains, particularly in the U.S., evidenced by Q2 sales surging 32% to CHF 749.2 million, exceeding estimates. While the company reported an unexpected Q2 adjusted loss per share of CHF 0.09 due to a weaker dollar, CEO Martin Hoffmann reiterated a premium brand strategy, even as tariffs on Vietnamese imports are set to increase to 40%.

Analysis

On Holding has demonstrated significant top-line acceleration, raising its full-year 2025 net sales forecast to at least CHF 2.91 billion and its adjusted EBITDA margin guidance to a range of 17% to 17.5%. This positive revision, which prompted a 10% premarket share increase, is fueled by a successful premiumization strategy, evidenced by a 32% sales surge in Q2 to CHF 749.2 million, comfortably beating estimates. The growth is broad-based, with shoe sales rising 29.9% and apparel sales jumping an impressive 75.5%, underscoring the brand's expanding market share against rivals like Adidas and Nike. However, this strong growth narrative is contrasted by two material headwinds. First, the company reported an unexpected adjusted loss per share of CHF 0.09 for Q2, missing the consensus profit estimate of CHF 0.21, which it attributed to adverse currency effects from a weaker dollar. Second, On Holding faces a substantial cost pressure as tariffs on its key imports from Vietnam are set to double from 20% to 40%, posing a significant risk to future margin stability despite the upgraded guidance.

Key Decisions for Investors

• Investors should weigh the company's powerful top-line momentum and market share gains against the significant Q2 earnings miss and considerable margin pressure from escalating tariffs.
• It is critical to monitor the impact of the doubling of tariffs on Vietnamese goods to 40%, as this could challenge the company's ability to achieve its newly raised adjusted EBITDA margin targets.
• Consider the 10% premarket stock appreciation as a signal that the market is currently prioritizing the strong growth and raised guidance over the currency-related Q2 loss and future tariff risks.