On Holding AG

Q2 net sales were CHF 850 million, up 21.6% at constant currency and 13.5% reported. DTC net sales were CHF 388 million, up 34.3% constant currency and 26.0% reported, while wholesale grew 12.7% constant currency and 4.8% reported. Gross margin was 65.4% and adjusted EBITDA margin was 19.8%, with adjusted EBITDA up more than 30% year over year at constant currency. For the full year, On now expects constant-currency net sales growth in the low 20s, gross margin of at least 65%, and adjusted EBITDA margin of 19.5% to 20%; management said Q3 growth should be lower than Q4 because wholesale sell-in actions continue, while DTC should remain very strong.

David Allemann framed the quarter as validation of On’s premium, founder-led strategy: the company is prioritizing innovation, cultural relevance, and margin discipline over short-term volume. He repeatedly pointed to broad-based DTC strength, rising brand awareness to 30%, and growth in newer verticals like tennis, training, and apparel as evidence that On is still expanding its addressable market. His tone was confident and long-term focused, with the message that the brand is building for decades rather than quarters.

Frank Sluis emphasized that Q2 reflected disciplined execution translating into profitability, with gross margin at 65.4%, adjusted EBITDA margin at 19.8%, and cash increasing by CHF 185.2 million to just over CHF 1.2 billion in net cash. He said net working capital improved by CHF 14.9 million versus Q1 and remained below 20% of sales, while capital expenditure was CHF 28.2 million, mainly for selective retail expansion and infrastructure. On guidance, he said the gross margin uplift is driven mainly by a higher DTC mix, stronger full-price execution, and operating efficiencies, while EBITDA margin is held at 19.5% to 20% because of some deleverage from the revised top line outlook and continued reinvestment.

Analysts focused on whether athletic wear demand is slowing, the reason for the higher gross margin outlook, and how long the wholesale softness in Americas might last. Management said the broader opportunity remains intact because consumers are moving toward premium innovation and the “movement class” is expanding, while the wholesale issue is mainly an Americas running channel problem tied to a promotional market and deliberate sell-in restraint. They also said Q3 growth will be weaker than Q4 because of these actions, but DTC is still tracking ahead of expectations and early Q3 wholesale sell-through is in line with the outlook and showing positive initial signs.