On Holding Reports Robust 2024 Performance, Addresses Tariff Landscape
On Holding AG (NYSE: ONON), the Swiss athletic footwear and apparel company, reported substantial growth for the full year 2024, with net sales advancing by 29.4% on a reported basis to CHF 2,318.3 million. This performance exceeded market expectations, prompting management to articulate its strategic approach to maintaining growth and profitability amidst an evolving global trade environment, particularly concerning increased import tariffs.
Financial Performance Overview
On Holding concluded 2024 with a strong financial footing. Net sales for the full year reached CHF 2,318.3 million, representing a 29.4% year-over-year increase (33.2% on a constant currency basis). The company recorded a gross profit margin of 60.6% and net income of CHF 242.3 million. Adjusted EBITDA margin stood at 16.7%. The fourth quarter of 2024 alone saw net sales climb to CHF 606.6 million, a 35.7% growth year-over-year.
A key driver of this expansion was the Direct-to-Consumer (DTC) channel, which saw full-year sales increase by 40.3% to CHF 942.8 million. The DTC channel's share of net sales reached a record high of 48.8% in Q4 2024, contributing to a robust gross profit margin of 62.1% for the quarter. Geographically, Asia-Pacific sales demonstrated exceptional growth, rising by 84.5% in 2024, while Americas increased by 27.4% and EMEA by 18.2%.
For 2025, On Holding projects continued strong growth, anticipating at least a 27% constant currency net sales growth rate, equating to reported net sales of at least CHF 2.94 billion. The company aims to maintain a gross profit margin of approximately 60.5% and an adjusted EBITDA margin in the range of 17.0% to 17.5%.
Navigating Elevated Tariff Headwinds
On Holding faces a significant increase in import duties on products sourced from Southeast Asia, with tariffs rising from an approximate 20% to 40%. CEO Martin Hoffmann addressed this challenge, emphasizing the company's long-term strategy and premium brand positioning as key mitigants.
"Whether we're facing tariffs or a pandemic, it's important to know what you stand for as a brand. We're still growing fast as a premium brand. The combination gives us many opportunities to be able to offset the impact as a company as we bring new products at a higher level of innovation and at higher price points."
Hoffmann clarified that the industry has historically paid around 20% import duties, and the recent increase means tariffs now effectively stand at 40%. The company, which sources approximately 90% of its products from Vietnam, asserts it "would never increase prices just because of tariffs." Instead, On Holding plans to absorb these costs through a multi-faceted approach, including: leveraging its premium brand to maintain pricing power, introducing innovative products that justify higher price points, benefiting from increased sales volume to secure better factory pricing, and optimizing freight and supply chain efficiencies.
Analysts at Raymond James estimate that the elevated tariffs could represent an unmitigated annual headwind of 300 basis points to On Holding's profit margin, potentially impacting the gross margin by -60 basis points, reducing their forecast to 60.0%. This has also led to a downward revision of 2025 revenue estimates to $2.9 billion (from $2.95 billion) and 2026 revenue to $3.5 billion (from $3.6 billion). Earnings Per Share (EPS) estimates were also adjusted, with 2025 reduced to $0.69 (from $0.72) and 2026 to $0.71 (from $1.03). Despite these projections, On Holding's management remains confident in achieving a slight expansion in Adjusted EBITDA Margins for 2025.
Strategic Positioning and Growth Drivers
On Holding continues to reinforce its commitment to being a "most premium global sportswear brand," a strategy that underpins its ability to navigate market complexities. The company's strong brand demand allows it to capture market share effectively. Innovation remains a core pillar, with new technologies like LightSpray™ and popular models such as Cloudsurfer and Cloudmonster driving product sales. The company is also expanding its global retail footprint, with nearly 50 stores worldwide, to enhance brand visibility and direct customer engagement.
Beyond footwear, On Holding is experiencing rapid growth in its apparel category, with sales increasing from $47 million in 2022 to over $100 million in 2024, and a further 67.5% increase in the first half of 2025. This diversification strengthens cross-selling opportunities and overall brand immersion for customers, aligning with the strategic importance of its robust DTC channel.
Broader Market Context and Implications
The rising tariff landscape is a macroeconomic event impacting the broader athletic footwear industry. Major players such as Nike have also acknowledged significant cost implications, with Nike anticipating approximately $1 billion in additional costs and a 75-basis point gross margin impact due to tariffs. The general market uncertainty stemming from tariffs can compress corporate profit margins and potentially influence economic growth. However, On Holding's focused strategy on premium positioning, innovation, and agile supply chain management aims to differentiate its ability to manage these headwinds compared to some larger, less nimble competitors. The company's strong brand momentum positions it to address these challenges with strategic flexibility.
Outlook and Future Considerations
On Holding's revised outlook for 2025, anticipating robust net sales growth and stable profitability margins, reflects management's confidence in its strategic initiatives. The company plans to accelerate strategic investments in marketing, innovation projects, and technology, viewing these as essential for sustained long-term growth and maintaining its premium market position. The ability of On Holding to effectively manage the tariff burden through internal efficiencies and continued brand strength will be a critical factor for investors to monitor in the coming quarters.
Edgen Stock·Sep 26 2025, 17:11