With key footwear franchises continuing to selling well, On Holding AG remains a growth story but there could be pressures ahead in 2026.
Wall Street expects On Holdings’ brand momentum to continue into the start of the first quarter, but that’s when the impact of tariffs could begin to be felt fully after becoming a headwind in the fourth quarter.
On is expected to report its fourth quarter and full-year earnings results on Tuesday.
Needham’s Tom Nikic believes that On will remain a compelling growth story in 2026 as brand awareness continues to grow globally. He noted that online search trends saw 30-plus percent growth in the U.S. and 75-plus percent growth globally, while social media followers were up nearly 30 percent year-over-year.
Most of On’s growth has been primarily from North America. However, Asia and EMEA (Europe, Middle East and Africa) are growing markets and are expected to contribute more to overall growth this year. The Needham analyst said Asia now accounts for a “high-teens percent of sales.”
Moreover, a cleanup of distribution in 2024 and new, high-profile distribution in EMEA has resulted in a re-acceleration in the region, with four consecutive quarters of growth of 33 percent or more. That has outsized the U.S., which has been growing between 20 percent to 25 percent, Nikic noted. The cleanup involved exiting the family footwear channel in Europe, retail accounts similar to a DSW or Famous Footwear in North America. The new positioning as a premium athletic brand has involved expansion through key retailers that include Foot Locker and JD Sports.
One impact likely to be felt in the first quarter in the impact from tariffs. Nikic, noting the brand’s inventory turnover every six months, said On’s “supply chain dynamics mean they only felt it partially” in the fourth quarter of fiscal year 2025, with the first quarter of fiscal year 2026 when the company will see the first full quarter of tariffs. Almost none of the brand’s products are sourced from China, but it does feel the impact of tariffs on Vietnamese imports. He is expecting the company to plan for a gross margin decline for fiscal year 2026. Nikic also said there is also the possibility of foreign exchange headwinds due to the stronger Swiss franc.
Cristina Fernández at Telsey Advisory Group (TAG) noted that On has a “good slate of footwear product introductions planned” for 2026. She cited to Cloudmonster 3 and Cloudrunner 3 in the first quarter, the commercialization of LightSpray beginning in March, and Cloudsurfer 3 in the third quarter. Adding to On’s growth prospects is the planned store openings of between 20 to 25 doors, as well as continued expansion in underpenetrated markets that include Asia Pacific, parts of Europe and Latin and South America.
The TAG analyst said high, full-price selling due to low promotions and lower freight costs should “more than offset” the impact of any tariff headwinds in the fourth quarter. She also noted that On has anticipated “gross margin contraction in 2026 off a high 62.5 percent in 2025” due to a one-time benefit from lower freight rates and the full impact of tariffs.
Jefferies analyst Randal J. Konik sees the U.S. market as a potential “yellow” flag for the On brand. The Americas represents 64 percent of total sales, but is maturing as it is now growing off a much larger base, one that he says is “normalizing” compared with prior peak periods. That means that incremental share gains will be harder to sustain, Konik said. Perhaps more importantly, the analyst said growth will increasingly depend on “repeat demand and productivity rather than easy distribution wins.”
He also said that wholesale tailwinds are fading, with door growth decelerating from double-digit percent to mid-single-digit percent expansion. “As distribution maturity sets in, the bar for wholesale growth rises, especially given the return of Nike, creating a credible path to wholesale growth converging toward a lower, more sustainable rate. We see fewer levers to drive upside,” Konik concluded.
Another concern the Jefferies analyst raised is the macro-economic backdrop, which he says is less supportive of broad-based price increases.
“In a tougher pricing environment, and with competitive intensity rising, premium positioning alone may not be enough to sustain price-led growth without risking demand and/or higher promotional activity elsewhere in the channel,” he concluded.
Konik last August rated shares of On a “Hold” following some green shoots surrounding a Nike turnaround. Part of that rationale included the opinion that retail orders in 2026 could see wholesale orders flowing back to the Nike brand. Moreover, On was one of the brands that made gains as Nike lacked product newness and was in the process of exiting doors in the wholesale channel. And with average footwear prices between $150 and $200, there is a limit to the range of consumers the brand can attract. Moreover, Konik’s view is that there is a limit to On’s apparel sales as its products are “highly technical and very expensive,”
