On Holding - more than just expensive shoes

From running shoes to sportswear

On started in Switzerland in 2010 with one main idea: make a better running shoe.

Running is still the heart of the company, but today On sells products across running, tennis, training, outdoor and lifestyle. More importantly, the company is increasingly moving beyond footwear and into apparel and accessories.

That's where I think the story gets interesting.

On doesn't just want to become a bigger running-shoe company. It wants to become a global premium sportswear brand.

Think about how that works from the customer's perspective. You buy a pair of Cloudmonsters, like them and eventually buy another pair. Then perhaps you add some running shorts, a jacket and a T-shirt. Suddenly you've spent CHF 600 just to go for a jog.

Welcome to premium sportswear.

And the numbers suggest this is already starting to happen.

Product	H1 2025	H1 2026	Growth*
Footwear	CHF 1.39bn	CHF 1.55bn	+21.4%
Apparel	CHF 74.8m	CHF 109.5m	+56.9%
Accessories	CHF 15.2m	CHF 27.4m	+94.4%

Growth in constant currency.

Footwear still represents around 92% of sales, so shoes will remain the engine for a long time. But apparel grew almost 57% and accessories almost doubled, giving On another way to grow without necessarily finding another customer.

Same customer. More products. Bigger shopping basket.

And there are still plenty of customers left to find. According to On, global brand awareness is only around 30%. For a company already selling billions worth of products every year, that's surprisingly low.

The brand is going global

The second part of the story is geography.

On is already a major brand in the US, but increasingly the growth is coming from elsewhere. In H1 2026, sales in EMEA grew 22.8% in constant currency, while Asia-Pacific grew an impressive 58.1%. Asia-Pacific sales have increased from CHF 240 million to CHF 345 million in only one year.

That's what I want to see.

On isn't dependent on squeezing another pair of shoes out of the same American customer. It can grow by entering new countries, opening stores, attracting new customers and then selling those customers more products.

The company's own stores are also becoming increasingly important. Direct-to-Consumer sales grew 31.6% in H1, compared with 19% for wholesale, and DTC now accounts for almost half of quarterly sales.

I like that for a simple reason: On gets closer to the customer and keeps more of the money.

Instead of selling a CHF 200 shoe through someone else's store, On can sell it itself while controlling the presentation, customer experience and price. The stores therefore aren't just stores – they're also giant advertisements for the brand.

Of course, they still need to make money. Otherwise On has simply built some very expensive shoe displays around the world.

More sales – even more profit

This is about as deep as I want to go into the accounting, because the important part is pretty simple.

In Q2 2025, On generated CHF 749 million in revenue and CHF 93 million in EBIT. One year later, revenue had increased to CHF 850 million while EBIT reached CHF 119 million.

Revenue grew 13.5% – EBIT grew almost 29%.

That's scaling.

Gross margin also increased from 61.5% to 65.4%, meaning On isn't buying its growth by lowering prices. Customers are still willing to pay premium prices while the company becomes more profitable.

That's important because I don't think On's greatest asset is CloudTec, LightSpray or any other piece of shoe technology.

It's the brand.

Nike has engineers too. So do Adidas, Hoka and New Balance. What On needs to protect is the customer's willingness to walk into a store, look at a pair of shoes costing CHF 200 and think:

"Yeah, I'll take those."

As long as that continues, the economics can be very attractive.

Protect the brand at all costs

This is also why I'm not overly worried about the recent slowdown in the Americas. Part of it appears intentional.

On could push more products into American retailers and generate higher sales today, but that creates a risk if those retailers can't sell everything at full price.

And premium brands don't want this:

CHF 200 → CHF 180 → CHF 160.

Eventually, the customer learns to wait. Why buy On at full price if it's always on sale three months later?

Management has therefore deliberately limited some wholesale volumes in the US and moderated its 2026 growth expectations to the low-20% range in constant currency. At the same time, gross-margin expectations have actually increased.

I like that decision.

I'd rather own a management team willing to sacrifice some short-term sales than one desperately pushing products into stores just to hit a quarterly growth target.

But there's something we need to watch: if American growth keeps slowing, we need to know whether On is choosing to sell fewer shoes, or customers are choosing not to buy them.

Those are two very different stories.

The valuation finally makes sense

On isn't a traditional value stock. It trades at roughly 20x earnings, which isn't exactly bargain territory – but neither is it terrifying.

I'm much more interested at this valuation than I would have been a few years ago. The company is larger, more profitable and still has plenty of room to grow internationally and across new product categories, yet the share price has fallen back toward levels seen in early 2024.

At one point, investors were willing to pay around 77x EV/EBIT for On.

Seventy-seven.

Apparently CHF 200 shoes weren't expensive enough. The stock had to join in too.

Today, expectations are much more reasonable. I'm still paying for growth, but I'm no longer paying for perfection.

And that's when companies like On start getting interesting to me.

Now... about that football player

Remember the rumor from the beginning?

It's Kylian Mbappé.

His previous footwear agreement with Nike expired on July 31, 2026, and there is speculation that On could be involved in whatever comes next.

Let me make this clear:

There is no confirmed On x Mbappé deal.

But holy shit, if there is something to it...

On currently doesn't make football boots (soccer cleats – there you go, America), so signing Mbappé could mean much more than another celebrity endorsement. It could potentially mark On's entrance into an entirely new sport, with one of the most recognizable athletes on the planet leading the launch.

There has even been speculation about Mbappé potentially receiving equity and having his own football sub-brand.

Again – rumors.

But the idea isn't completely crazy. On has already shown us this playbook with Roger Federer, who became an investor before On built a serious tennis presence around the relationship.

An athlete with skin in the game is much more interesting than an athlete collecting another sponsorship cheque.

And if you've seen all the memes about Mbappé apparently wanting to run every football club he enters like a dictator, perhaps this is the perfect solution:

Give the man some shares, his own football boot and let him think he's running the company too.

Problem solved.

Jokes aside, football could be a fascinating next step for On. Running gave the company credibility, tennis expanded the brand, and football could expose it to an enormous global audience.

But for now:

Mbappé is the cherry on top – not the cake.

What can go wrong?

The biggest risk with On is pretty simple.

Nobody needs On shoes.

This isn't ResMed from my previous newsletter. Nobody wakes up in the middle of the night screaming:

"Quick! Get me a Cloudmonster!"

On is a consumer brand, and consumers can change their minds very quickly. You can wear On today, Hoka tomorrow and Nike next year. There are basically no switching costs, which means On has to keep earning the customer's attention.

If On stops being desirable, inventory starts building. Then come discounts, weaker margins and eventually weaker profits.

So far, I'm not seeing that. Margins are improving, inventory isn't outrunning sales and apparel, accessories, DTC and international markets are moving in the right direction.

But brand heat is the risk.

Everything else comes after that.

What I'm watching

I don't need On to grow 50% every year, and I definitely don't need the stock trading at 77x EBIT again.

What I want is much simpler:

More people discover On → customers buy more On products → On sells more directly → margins improve → repeat.

That's really the whole investment case.

On has roughly 30% global brand awareness, apparel and accessories are still tiny compared with footwear, Asia is growing rapidly and DTC still has room to expand. If those pieces continue moving in the right direction while margins improve, there's plenty left to build.

So I'm mainly watching whether the brand continues growing internationally, whether customers start buying more than shoes and whether On can maintain its premium position.

And perhaps I'll keep one eye on the feet of a certain French football player.

At around 20x earnings, I'm finally paying a price where I think the story becomes interesting.

The stock has gotten cheaper. The company has gotten better.

And if the rumors are true, they might soon need to start making football boots.

Sorry, America.

Soccer cleats.

– Simen