On Holding (NYSE:ONON) shares are down more than 7% Tuesday even though third-quarter results topped estimates. The quarter included a one-time U.S. tariff refund of 52.6 million Swiss francs, which lifted margins.
Net sales reached a record 931 million Swiss francs, up approximately 18% year over year at constant currency, exceeding the company’s September expectations.
The company also achieved record underlying gross and adjusted EBITDA margins, supported by strong full-price demand and premium product launches despite a promotional retail environment.
In U.S. dollars, On Holding reported third-quarter adjusted EPS of 66 cents, beating the analyst estimate of 46 cents. Revenue reached $1.147 billion, topping the $1.140 billion consensus estimate.
Segment and Regional Performance
Running segment performance was led by the Cloudsurfer 3, which sold at more than four times the Cloudsurfer 2’s first-week launch pace. Demand for the Cloudboom Strike 2 Lightspeed was six times available production capacity.
In lifestyle, the Cloudtilt ARC beat sales plans in all three regions in its first days, topping plan by more than four times in Asia Pacific. New Cloudnova Moon Mary Jane and Cloud Muse sneakers also recorded strong initial demand.
Apparel revenue increased 38% at constant currency, keeping the company on track to triple apparel sales over the next 10 years. Its latest collection with Zendaya generated a reach of 2.5 billion, with nearly 90% positive sentiment. On aims to more than double store-level apparel productivity over the next three years.
Growth remained broad-based across regions and channels. Japan continued to see demand exceed supply, while the Americas benefited from stronger wholesale sell-through. Direct-to-consumer sales accounted for 42.2% of total revenue.
On is also expanding into football and golf, with its golf offering planned for the first half of 2027. Football campaign-related e-commerce sales more than tripled in France and more than doubled in Germany and Spain.
The company continues investing in proprietary technologies, including Surreal superfoam, CloudTec, robotics and LightSpray manufacturing, alongside stores, athletes and new sports categories to support growth through 2029.
2026 Outlook
On reaffirmed its 2026 sales growth target in the low-20% range at constant currency and raised its gross margin outlook to around 66%, excluding tariff refunds, from at least 65%.
In U.S. dollars, the company reaffirmed its 2026 sales guidance of $4.273 billion to $4.383 billion, compared with the $4.270 billion consensus estimate.
Management aims to grow earnings faster than revenue over the next three years through premium pricing, continued innovation and disciplined full-price selling.
ONON Price Action: On Holding shares were down 7.57% at $34.69 at the time of publication Tuesday, according to Benzinga Pro data.
Photo: Todamo / Shutterstock
