Swiss sneaker maker falls 11% after record sales, as guidance falls short of expectations

Swiss sneaker maker On Holding experienced an 11% drop in its premarket stock trading on Tuesday, despite announcing record sales and improved profitability for the full year 2025 and projecting strong growth for 2026. This significant decline occurred as the company's 2026 sales guidance, implying at least 3.44 billion Swiss francs, fell short of the more optimistic sell-side analyst consensus, which had anticipated figures closer to 3.7 billion francs, leading to investor disappointment. The premium athletic footwear and apparel brand reported robust financial performance for the fourth quarter of 2025, with net sales reaching 743.8 million Swiss francs ($946 million), marking a 30.6% increase in constant currencies and surpassing LSEG estimates of 723.5 million francs. For the entire fiscal year, On's sales exceeded 3 billion francs for the first time, slightly ahead of analysts' predictions of 2.99 billion francs. Profitability also reached new highs, with adjusted EBITDA for the fourth quarter climbing 31.8% to 131 million francs, reflecting an 18.8% margin and beating LSEG estimates. The company attributed this strong performance to operational efficiencies and the strategic strength of its brand positioning. On Holding is currently in the final year of its ambitious strategy to double sales to 3.55 billion francs and boost its EBITDA margin to at least 18% by 2026, as it strives to become "the most premium global sportswear brand." The company, which went public on the New York Stock Exchange in 2021, has successfully captured market share from established competitors like Nike and Adidas through its focus on innovative products and high-performance footwear and apparel. Co-founder David Allemann highlighted a societal shift towards health and performance, positioning On as uniquely capable of meeting discerning consumer demands. CEO Martin Hoffmann underscored that the premium strategy allows for exceeding aspirations while reinvesting in high-return areas for future growth. Regionally, Asia-Pacific was a standout performer, with sales surging 85.1% in constant currencies, while the Americas and EMEA grew by 21.3% and 27.5% respectively in the three months ending December. Despite the strong underlying performance and strategic execution, the market's reaction to the 2026 guidance underscores investor sensitivity to future growth expectations. While On expects at least 23% net sales growth in constant currencies for 2026 and an adjusted EBITDA margin between 18.5% and 19%, the gap to analyst consensus proved significant. Some analysts, including Jefferies' Randal Konik, have raised concerns about mounting challenges in 2026, citing a tougher pricing environment and rising competitive intensity. Konik suggests that premium positioning alone might not suffice to sustain price-led growth without risking demand or requiring increased promotional activity, leading to an "Underperform" rating on the stock.