On Holding AG (ONON): SWOT Analysis [Nov-2025 Updated]

You're watching On Holding AG (ONON) explode in the premium sportswear market, but the question is whether their high-flying valuation is sustainable. The company is posting phenomenal operational results, like a 65.7% gross margin in Q3 2025 and Asia-Pacific sales surging 109.2% constant currency, which speaks to a powerful brand and product. But honestly, the strong Swiss franc is a real headwind, causing a CHF 40.9 million net loss in Q2 2025, and you need to know how that currency risk maps against the massive opportunity in their Apparel category. Let's break down the core strengths, weaknesses, opportunities, and threats that will defintely define ONON's next move.

On Holding AG (ONON) - SWOT Analysis: Strengths

The core strength of On Holding AG is its ability to command a premium price point while delivering exceptional, profitable growth, a rare combination in the competitive sportswear market. The Q3 2025 results are a clear validation of this strategy, showing a massive expansion in gross margin and triple-digit growth in key global regions. This isn't just a short-term burst; it's a structural advantage built on product innovation and a smart distribution model.

Record high gross margin of 65.7% in Q3 2025

The most compelling financial strength is the company's profitability, which hit a new peak in the third quarter of 2025. The gross profit margin soared to a record-breaking 65.7%. This margin is exceptional for the apparel and footwear industry and reflects strong pricing power and operational efficiency. Here's the quick math: the margin expanded by 510 basis points year-over-year.

This massive jump was driven by two key factors:

• Structural efficiencies from increased scale and favorable product mix.
• A one-off benefit of approximately 200 basis points from lower-than-anticipated freight and other costs.

What this estimate hides is the brand's defintely strong premium positioning, which allows it to maintain high average selling prices (ASP) even as volumes rise. For the full fiscal year 2025, the company expects the gross profit margin to settle near 62.5%.

Exceptional constant currency net sales growth, guided at 34% for full-year 2025

The top-line growth is just as impressive as the margins. On Holding AG has raised its full-year 2025 guidance, now expecting net sales to grow by a massive 34% year-over-year on a constant currency basis. This translates to reported net sales of approximately CHF 2.98 billion (Swiss Francs).

This growth rate is a clear signal that demand is not slowing down. It's a testament to the brand's expanding appeal beyond its initial running shoe base and into the broader performance sportswear and lifestyle categories. A growth rate of 34% in a mature market is a serious competitive advantage.

Proprietary CloudTec cushioning technology drives premium brand positioning

At the heart of the pricing power is the unique product. On Holding AG's proprietary CloudTec cushioning technology-a sole system featuring a series of hollow pods-is a key differentiator. This innovative design delivers a responsive, cushioned landing and an explosive take-off, which is what athletes are looking for.

This innovation justifies the brand's premium positioning, with its average product price point typically ranging from $180 to $250. The company has consistently invested in R&D, which is how they maintain this technological moat against competitors. It's what keeps them out of the commoditization trap.

Strong Direct-to-Consumer (DTC) channel, with Q3 2025 sales up 37.5% constant currency

The shift to a strong Direct-to-Consumer (DTC) channel is a major structural strength that ties directly back to profitability. In Q3 2025, DTC net sales grew by 37.5% on a constant currency basis, reaching CHF 314.7 million.

This channel is crucial because it offers several benefits:

• Higher margins by cutting out the middleman.
• Direct control over the customer experience and brand narrative.
• Better data collection for product development and demand forecasting.

The DTC channel accounted for a significant portion of the total net sales, showing a healthy balance with the wholesale channel, which grew by 32.5% constant currency in the same quarter.

Global momentum, with Asia-Pacific sales surging 109.2% constant currency in Q3 2025

The brand's global expansion is accelerating, with the Asia-Pacific (APAC) region serving as the primary growth engine. APAC sales surged a phenomenal 109.2% on a constant currency basis in Q3 2025. This is triple-digit growth for the fourth consecutive quarter in the region.

To put this in perspective, here's how the regional performance stacked up in Q3 2025:

The APAC region is now approaching 20% of the company's total sales. This kind of geographic diversification and explosive growth in a high-potential market like APAC de-risks the business model and provides a clear runway for future sales volume.

On Holding AG (ONON) - SWOT Analysis: Weaknesses

You're looking at On Holding AG and seeing explosive growth, but as a seasoned analyst, you have to look past the top-line revenue and focus on the structural risks. The company's weaknesses are not about its product quality; they are about financial volatility, a premium valuation that leaves no room for error, and a concentrated supply chain that creates a clear geopolitical vulnerability. These are the factors that can quickly derail a high-growth narrative.

Profitability highly sensitive to foreign exchange (FX) losses, causing a CHF 40.9 million net loss in Q2 2025

On Holding AG's profitability is highly exposed to currency swings, particularly the strong Swiss Franc (CHF) against the U.S. Dollar. This isn't just an accounting footnote; it directly caused a major drag on the bottom line in the first half of 2025.

In the second quarter of 2025, the company reported a net loss of CHF 40.9 million, a sharp drop from a profit of CHF 30.8 million in the prior year period. This loss occurred despite a 32.0% year-over-year increase in net sales to CHF 749.2 million and a strong adjusted EBITDA of CHF 136.1 million.

The core issue was a substantial unrealized foreign exchange loss of CHF 139.9 million in Q2 2025. This FX impact was primarily driven by the revaluation of U.S. Dollar-based assets, like cash and cash equivalents, as the U.S. Dollar closed near a multi-decade low of €0.79 against the Swiss Franc. This is a clear financial risk: strong operational performance can be completely wiped out by currency volatility.

High valuation multiple compared to larger, more diversified sportswear peers

The market is pricing On Holding AG as a hyper-growth stock, which means its valuation multiples are significantly inflated compared to its larger, more diversified competitors like Nike and Adidas. The premium you pay for ONON is the risk you assume if growth slows even slightly.

For fiscal year 2025, On Holding AG trades at an estimated Enterprise Value-to-Sales (EV/Sales) multiple of approximately 4.6x, based on its projected CHF 2.8 billion in sales. This is a steep price tag when you compare it to the industry giants:

Here's the quick math: On Holding AG's revenue is valued at over 2.3 times the multiple of Nike and nearly 4 times that of Adidas on an EV/Sales basis. That's a massive growth expectation baked into the stock price, and any hiccup-like a major product flop or a recession-will trigger a painful re-rating.

Brand perception still heavily skewed toward running, risking limited appeal in broader lifestyle markets

While the brand is making a concerted effort to expand into lifestyle and training, it remains overwhelmingly a running-shoe company in the eyes of the consumer. This narrow focus limits its total addressable market (TAM) and makes it vulnerable to shifts in running trends or increased competition from Deckers' HOKA or other emerging brands.

Footwear continues to dominate the product mix, accounting for 94% of net sales in Q2 2025. This concentration shows that the push into non-footwear categories is still in its early stages.

Management has set an ambitious long-term target to reach a 10% share of net sales from apparel, but as of Q3 2024, apparel sales were only 4.2%. The brand needs to prove it can translate its performance credibility into a broader lifestyle appeal, similar to what Lululemon or even Nike has done. Until then, it's a one-product-category risk.

Reliance on a concentrated supply chain for manufacturing, creating geopolitical risk

The company's reliance on a small, geographically concentrated group of third-party manufacturers exposes it to significant geopolitical and operational risk. You don't build resilience with a handful of partners.

On Holding AG works with a select group of approximately 25 third-party suppliers globally, and in 2024, just five of these suppliers produced roughly 70% of its products. The concentration is particularly acute in footwear:

• Footwear production is concentrated among nine suppliers.
• Of those nine, eight are located in Vietnam.
• The remaining one is in Indonesia.

This high concentration in Vietnam creates a direct exposure to U.S. tariffs and trade tensions with Asian countries. The company had to raise prices in the U.S. on July 1, 2025, to offset higher tariff-related costs, which could eventually impact demand, especially in the premium lifestyle segment where price sensitivity is higher.

On Holding AG (ONON) - SWOT Analysis: Opportunities

Scale the rapidly growing Apparel category, which saw 100.2% constant currency growth in Q3 2025

You're seeing a classic financial inflection point here: the Apparel category is no longer a side project; it's a core growth pillar. In the third quarter of 2025, Apparel net sales exploded by 100.2% in constant currency, reaching CHF 50.1 million on a reported basis. This is huge, and it's a defintely a high-margin opportunity.

For the first time ever, On Holding sold over 1 million apparel units in a single quarter. This operational milestone proves the scalability of the supply chain and validates the consumer demand for a full head-to-toe look. The opportunity isn't just selling a shirt; it's about increasing the average transaction value and deepening brand loyalty through the higher-margin Direct-to-Consumer (DTC) channel.

The Apparel category is a proven, high-growth lever.

Expand into new categories like tennis and training, attracting a younger US consumer base

The US market, which is On Holding's most important, is actively seeking the brand for new product categories like tennis and training sneakers. This isn't just a hunch; it's a stated, deliberate strategic building block for the company's long-term plan, aiming to establish credibility in performance-focused adjacencies.

This category expansion helps diversify the revenue base away from core running footwear and attracts a younger consumer. Partnerships with global figures like actor Zendaya, who appeal directly to this demographic, are a key part of this strategy. The Americas region already saw strong constant currency growth of 21.0% in Q3 2025, even with price increases, showing the premium strategy holds up.

• Tennis: Leverage co-founder Roger Federer's influence and product line (The Roger franchise) to capture market share in a premium, high-value sport.
• Training: Enter the gym and cross-training communities, which represent a massive, underserved segment for a premium, tech-focused brand.

Further capitalize on the explosive Asia-Pacific market growth and premium consumer demand

The Asia-Pacific (APAC) region is the most explosive growth engine globally, offering a clear runway for market share gains. In Q3 2025, APAC delivered extraordinary constant currency growth of 109.2%, with reported net sales reaching CHF 144.9 million. This marks the fourth consecutive quarter of triple-digit constant currency growth in the region.

This growth is driven by a consumer base that is 'even younger' and specifically seeks out the brand's 'premium appeal' as an alternative to mass-market offerings. The opportunity lies in accelerating the retail footprint in key markets like Greater China and South Korea, where the brand's market share is still well below 5%.

Here's the quick math on regional performance in Q3 2025:

Increase market share from legacy brands like Nike and Adidas, which are losing ground in running

The competitive landscape is shifting, and On Holding is the primary beneficiary. While Nike still holds a dominant global market share (around 40% of athletic footwear), On Holding's global share, though still small (under 3% as of May 2025), has increased eightfold since 2019. This indicates a sustained, long-term trend of market share capture.

Legacy brands are facing headwinds; for example, Nike's revenues fell 9% in a recent quarter, and the company is in a turnaround phase. On Holding is positioned as the premium, innovative challenger, allowing it to maintain high gross margins-reaching a record 65.7% in Q3 2025-by avoiding the discount wars that plague mass-market competitors. This premium positioning is a structural advantage that allows for continued investment in R&D and marketing.

Next Action: Marketing Team: Draft a Q1 2026 campaign brief focused on the tennis and training categories, specifically targeting the US younger consumer demographic, to capitalize on the new category expansion opportunity.

On Holding AG (ONON) - SWOT Analysis: Threats

You're looking at On Holding AG's phenomenal growth-that Q3 gross margin of 65.7% is fantastic, but it's a target for competitors. Still, the brand is defintely resonating globally. The real risk isn't a lack of demand; it's the external forces that can quickly erode those premium margins and slow the pace.

We need to map out the threats that could turn a constant-currency growth rate of 34.5% (Q3 2025) into a much smaller reported number. The biggest dangers are the currency swings, the sudden jump in U.S. tariffs, and the relentless pressure from rivals.

Intense competition from established giants and fast-growing rivals like Hoka

The athletic footwear market is hyper-competitive, and On Holding AG, despite its premium positioning, is fighting a two-front war. On one side, you have the established giants like Nike and Adidas, who have massive marketing budgets, deep distribution networks, and a history of quickly co-opting successful new technologies or styles.

On the other side, you have the direct, fast-growing rival, Hoka (owned by Deckers), which has been gaining significant market share, especially in the U.S. road running category, though its growth is now moderating. In Q2 2025, Hoka's net sales grew by 11.1% year-over-year to $634.1 million, a deceleration from prior periods, but still a formidable presence. The threat is not just in running; On is diversifying, but Hoka is doubling down on its max-cushion style, which could limit On's potential in that segment. On's strength is its broader appeal, with running making up only 55% of its revenue mix compared to Hoka's 80%.

The market is crowded, and maintaining a premium price point requires constant innovation. One misstep in a product launch or a style trend shift could quickly favor a rival.

Currency volatility, especially the strong Swiss franc, eroding translated profits

As a Swiss-based company reporting in Swiss francs (CHF), On Holding AG is highly exposed to foreign exchange (FX) fluctuations, particularly against the U.S. dollar and Euro, where a large portion of its revenue is generated. When the Swiss franc strengthens, it makes the company's products more expensive for international buyers and reduces the value of foreign sales when translated back into CHF.

This is a clear and present danger, not a theoretical one. In the Q2 2025 results, the company reported a net loss of CHF 40.9 million, largely driven by CHF 139.9 million in unrealized foreign exchange losses from the valuation of U.S. dollar-based assets. This massive FX loss completely overshadowed a strong operational quarter. The continuous weakness of the U.S. dollar against the Swiss franc, which closed near multi-decade lows at 0.79 in Q2 2025, is an ongoing headwind that will continue to absorb profitability.

Here's the quick math: that Q3 gross margin of 65.7% is fantastic, but it's a target for competitors. Still, the brand is defintely resonating globally.

Potential U.S. tariffs and trade policy shifts could increase manufacturing costs

The global supply chain for athletic footwear is heavily concentrated in Southeast Asia, and recent U.S. trade policy shifts have introduced significant cost uncertainty. New U.S. tariffs imposed in April 2025 targeted key manufacturing hubs, which directly impacts On Holding AG's cost of goods sold (COGS).

The company's reliance on these regions is substantial:

• Approximately 90% of On Holding AG's footwear is produced in Vietnam.
• Approximately 10% of its footwear is produced in Indonesia.

These countries have been hit with substantial tariff hikes on imports to the U.S.: Vietnam faces an increase of up to 46%, and Indonesia up to 32%. While the company has been noted for having little exposure to Chinese tariffs, these new levies on Vietnam and Indonesia are a serious threat. These new costs will either be absorbed, hitting the full-year gross profit margin guidance of around 62.5%, or passed on to consumers, risking price elasticity and demand.

Macroeconomic slowdowns impacting discretionary spending on premium-priced athletic gear

On Holding AG's success is built on a premium pricing strategy. This makes the brand highly susceptible to a broader macroeconomic slowdown, which typically causes consumers to pull back on discretionary (non-essential) purchases. The current uncertain macroeconomic outlook is a key risk factor that management has acknowledged.

The company's high average selling price means its customer base is likely more affluent, but even this segment can become cautious. Any consumer shift toward lower-priced alternatives or a delay in replacing high-end running shoes would directly impact sales volume and force the company to rely more heavily on its DTC channel (Direct-to-Consumer) to maintain margins, as wholesale partners may demand higher promotional activity. This is the core challenge of a premium brand: you must maintain the premium price to protect the brand image, even when the market is demanding discounts.

Next step: Portfolio Managers should stress-test the full-year CHF 2.98 billion revenue guidance against a 10% currency headwind scenario by Friday to assess true operational resilience.