ON (NYSE:ONON) reported record third-quarter sales and raised its full-year gross margin outlook, as demand for its footwear and apparel helped the company maintain full-price sales in a promotional market.
Net sales rose 17.2% to CHF 931.4 million, or 17.8% on a constant-currency basis, the company said on its earnings call. Founder and Co-CEO Caspar Coppetti said sales exceeded the company’s latest expectation, provided in September, and marked its first quarter above CHF 900 million.
Gross margin excluding tariff refunds reached a record 66.9%, while adjusted EBITDA margin excluding one-off tariff and freight items was 21.9%, also a record, CFO Frank Sluis said. Including CHF 52.6 million in U.S. tariff refunds, reported gross margin was 72.6%.
“We delivered these results in what remains a highly promotional environment by staying true to who we are,” Coppetti said, citing innovation, design and storytelling. He said new technologies and styles sold strongly at full price.
Direct Sales Grow Faster Than Wholesale
Direct-to-consumer sales rose 25.0% to CHF 393.3 million, accounting for 42.2% of total sales, up 2.6 percentage points from a year earlier. Wholesale sales increased 12.2% to CHF 538.2 million. At constant currency, the channels grew 24.8% and 13.2%, respectively.
Sluis said direct-to-consumer performance was slightly below the company’s expectations, partly because online traffic softened in the promotional environment and several store openings, including Munich and Miami, shifted into the fourth quarter. The share of online customers under age 24 almost doubled year over year, he said.
Wholesale results benefited from some Americas retailers taking holiday deliveries in late September that had been planned for October. Sluis said those earlier shipments would have a corresponding effect on fourth-quarter wholesale sales. He added that customer sell-through improved from the second quarter and that partners’ inventory levels were healthy.
By region, Americas sales rose 12.4% to CHF 490.1 million, while Asia Pacific sales increased 31.1% to CHF 189.9 million. EMEA sales grew 17.9% and surpassed CHF 250 million for the first time in a quarter. On a constant-currency basis, growth was 12.4% in the Americas, 19.1% in EMEA and 31.9% in Asia Pacific.
Sluis said Asia Pacific growth is expected to move gradually toward the mid-to-high 20% range outlined for the company’s 2027–2029 plan, rather than continue at the pace of the past two years.
New Products and Capacity Expansion
Footwear sales grew 16%, while apparel grew 38% and accessories 40.2%. Apparel and accessories together represented more than 9% of sales, Sluis said.
Coppetti highlighted the October launch of the Cloudsurfer 3 running shoe with select specialty retailers. Its first-week sell-through was more than four times that of the Cloudsurfer 2 in its launch week, he said. The shoe is scheduled for a broader rollout in January.
On is also expanding production of its LightSpray technology. Coppetti said demand remains above production capacity and that a Vietnam facility, once fully built, will more than double capacity. Alongside facilities in Switzerland and South Korea and planned football boot production in Portugal, the company expects to have four LightSpray production locations by mid-2027.
Football and golf are scheduled to launch next year. Coppetti said the football announcement had already lifted online sales of campaign products, although the company had not yet launched a boot.
Outlook Calls for Fourth-Quarter Acceleration
On reiterated its full-year forecast for net sales growth in the low 20% range at constant currency and said it expects growth to accelerate in the fourth quarter, predominantly through direct-to-consumer sales.
The company raised its full-year gross margin outlook excluding tariff refunds to around 66%, from at least 65%. It expects adjusted EBITDA margin excluding refunds of 19.5% to 20%. Including refunds, it forecasts gross margin of around 67.5% and adjusted EBITDA margin of 21% to 21.5%.
Sluis said the company had decided to reinvest some of its gross margin gains in the business, including football launch production costs and technology. He said On was maintaining its earnings outlook.
Asked about the first quarter of 2027, Sluis declined to provide quarterly guidance and said investors should not necessarily assume another strong acceleration. He said the broader introduction of new foams across running franchises in the second half of 2027 would likely have a more meaningful effect.
About ON (NYSE:ONON)
On Holding AG, which trades on the New York Stock Exchange under the symbol ONON, is a Swiss sportswear company that develops and sells performance footwear, apparel and accessories. Its products serve runners and other athletes, as well as consumers seeking athletic-inspired everyday wear. The company is known for its running shoes, which feature its CloudTec cushioning technology. On also offers apparel and equipment for activities including running, training and outdoor sports, selling through wholesale partners and its own retail and online channels.
