Business Context and Reporting Period
Company: On Holding AG (NYSE: ONON)
Filing Type: Form 20-F (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: On is a premium performance sportswear brand headquartered in Zurich, Switzerland, specializing in footwear, apparel, and accessories. The company operates through two primary channels: Wholesale (58.2% of sales) and Direct-to-Consumer (DTC) (41.8% of sales). Key strategic initiatives in 2025 included the launch of the Cloud 6 franchise, the opening of the world's first LightSpray production facility in Zurich, and significant retail expansion in Asia-Pacific (particularly China) and the Americas.
Key Financial Metrics
| Metric (CHF millions) | 2025 | 2024 | Change |
|---|---|---|---|
| Net Sales | 3,014.0 | 2,318.3 | +30.0% |
| Gross Profit | 1,893.6 | 1,405.7 | +34.7% |
| Gross Margin | 62.8% | 60.6% | +220 bps |
| Operating Result | 377.0 | 211.6 | +78.2% |
| Net Income | 203.7 | 242.3 | -15.9% |
| Net Income Margin | 6.8% | 10.4% | -360 bps |
| Adjusted EBITDA | 567.0 | 387.6 | +46.3% |
| Adjusted EBITDA Margin | 18.8% | 16.7% | +210 bps |
| Cash and Cash Equivalents | 1,019.9 | 924.3 | +10.3% |
| Net Working Capital | 570.3 | 498.9 | +14.3% |
Note: All figures are in Swiss Francs (CHF). The company reports under IFRS.
Material Changes vs. Prior Period
- Revenue Growth: Net sales grew 30.0% year-over-year, driven by strong performance across all regions. Asia-Pacific (APAC) saw the highest growth at 96.4%, followed by EMEA at 32.0% and Americas at 17.6%. DTC sales grew 33.7%, outpacing wholesale growth of 27.5%.
- Profitability Divergence: While Operating Result increased significantly by 78.2% due to operational efficiencies and margin expansion, Net Income decreased by 15.9%. This decline was primarily caused by a substantial foreign exchange loss of CHF 173.2 million (compared to a gain of CHF 67.7 million in 2024), driven by the revaluation of USD-denominated assets against the strengthening Swiss Franc.
- Margin Expansion: Gross margin improved to 62.8% from 60.6%, attributed to operational efficiencies in freight and favorable foreign exchange impacts on cost of sales. Adjusted EBITDA margin expanded to 18.8%.
- Product Mix: Apparel sales surged 68.2% and Accessories sales grew 124.1%, indicating successful diversification beyond the core footwear business (which grew 27.5%).
Guidance, Outlook, and Risks
Management Commentary & Outlook: Management continues to execute a three-pillar growth strategy: elevating foundations in running, expanding reach through multi-channel distribution (specifically DTC and China), and entering new categories (training, tennis). The company expects to continue investing in marketing, retail expansion, and the scaling of LightSpray technology. No specific numerical guidance for 2026 was provided in this text, but the company anticipates continued investment in infrastructure and brand building.
Key Risks and Contingencies:
- Foreign Exchange Volatility: The company faces significant translational and transactional FX risk. A 10% fluctuation in the USD/CHF rate could impact net income by approximately CHF 78.6 million. Unusual Item: Effective January 1, 2026, the functional currency of the parent company and main trading entity will change from CHF to USD to mitigate this volatility.
- Supply Chain & Geopolitics: Approximately 90% of footwear is produced in Vietnam. New US tariffs on Vietnam (20% reciprocal import tariff effective August 2025) are expected to increase costs. Geopolitical tensions (Red Sea disruptions, conflicts in Ukraine/Middle East) pose risks to logistics and costs.
- Brand & Competition: Risks include maintaining premium brand image, reliance on celebrity endorsements, and competition from larger incumbents (Nike, Adidas) and specialized brands.
- LightSpray Scaling: Success depends on the ability to scale the new manufacturing technology and achieve market traction for products made with it.
Investor Verification Checklist
- FX Impact on Net Income: Verify the sustainability of net income given the CHF 173.2 million FX loss in 2025 and the planned functional currency change to USD in 2026.
- Tariff Exposure: Assess the specific impact of the new 20% US tariff on Vietnam-sourced goods on future gross margins, given 90% of footwear production is in Vietnam.
- DTC vs. Wholesale Mix: Monitor the shift in sales mix toward DTC (now 41.8%) and the associated impact on gross margins and operating leverage.
- LightSpray Adoption: Track the commercial success and margin profile of products manufactured using the new LightSpray technology versus traditional manufacturing.
- Inventory Levels: Review inventory turnover and write-down risks, especially given the rapid expansion of the product portfolio into apparel and accessories.