Activewear brand On crossed a new threshold in 2025, with annual net sales surpassing 3 billion Swiss francs ($3.8 billion) for the first time. The retailer saw net sales growth of 30% for the year and reported gross margins of 62.8%, up from 60.6% a year ago.
The fourth quarter also saw strong gains, with sales up nearly 23% and a record gross margin of 63.9%. Net income for both the quarter and the year decreased, but the metric remained solidly in the black.
“Momentum for On remained strong in 4Q25, driven by a high sell thru of footwear franchises and balanced growth across regions,” Telsey Advisory Group analysts said in a client note Tuesday. “All metrics were better than expected and the stronger sales flowed through to the bottom line.”
On’s high gross margins are reflective of its premium brand positioning playbook. The results were driven by favorable currency dynamics, “structural operational efficiencies” and full-price execution, per the company’s press release.
“The DNA of building a premium brand is a very deep part of the team and the culture that we have built,” CEO Martin Hoffmann told Retail Dive in an interview in January. “This is very much at the center for us, how can we grow in a premium way … It allows us to chart our own way, not fishing in the same pond like everyone else. So while it's an enabler for growth, it also controls our growth at the same time. And I think this is the superpower of the premium position of the product.”
While the retailer released guidance that was lower than analysts expected, projecting constant-currency sales growth of “at least” 23% in 2026 and gross margins of at least 63%, that outlook doesn’t account for the recent changes to tariff policy after the Supreme Court invalidated a large swath of the Trump administration’s levies. Results could come in higher if new tariffs are lower than the previous tranche or if On receives any refunds for the overruled tariffs, Hoffmann said on a call with analysts.
Even with potentially lower tariffs than last year, On could face more headwinds related to the levies in 2026, Needham analyst Tom Nikic said in an earnings preview in late February. Due to On’s supply chain structure, the first quarter of 2026 will be its first full quarter of tariffs, Nikic noted, which means that On has yet to really see the impact of tariffs on its financials.
Still, some analysts are more concerned about On’s muted guidance than others. Jefferies analysts said the 2026 outlook implies that the brand’s upside is “dwindling,” right at a time when Nike is gaining back some of its momentum.
“We see big miss in sales/margins in '27,” the analysts wrote, citing slowing growth rates in On’s DTC and apparel businesses as well.
William Blair, on the other hand, called On “a healthy brand with strong demand signals across all segments and geographies.” The firm pointed out that while guidance is 6% below initial expectations, which also projects On’s revenue to hit below a three-year target set in 2023, the Swiss franc has strengthened 15% against the dollar since October 2023.
“We nevertheless maintain On as one of our top picks as we think the underlying constant-currency growth of the business is less appreciated for its durability,” William-Blair analysts said.
The analyst firm in an earnings preview in February said 2026 would also be “pivotal” in addressing concerns about a “Hoka-like deceleration” at On. These concerns are misplaced in that they “overlook On’s greater product diversification across silhouettes and use-cases, supporting brand durability beyond any single franchise,” according to William Blair.
Executives on a call with analysts stressed that the retailer has a strong pipeline of products planned for 2026, including the expansion of its LightSpray technology, which is set to be commercialized this month. Telsey analysts in a preview note in February also called out the slate of upcoming footwear releases, specifically the Cloudmonster 3, the Cloudrunner 3 and the Cloudsurfer 3.
The latter is one of the products gaining steam with younger consumers, Hoffmann told analysts, along with On’s work with actress Zendaya.
More broadly, On co-founder David Allemann described the brand’s pursuit of a consumer he calls the “movement class,” who prioritizes health and sees longevity as a luxury. To appeal to this shopper, the retailer is emphasizing innovation and bringing those improvements to everyday styles as well.
As it grows its customer base, apparel is an increasingly important category for customer acquisition, executives said. The company’s stores that emphasize apparel are showing promising results, Hoffmann said. The executive told Retail Dive in January that apparel would grow as On’s physical business grew as well, because “premium apparel needs space to be shown.” Apparel grew 75.5% in constant currency last year.
“We think there's a big untapped market today to be more fashion-forward, while still offering the consumer a product that makes you enjoy your movement sessions, enjoy your run,” Hoffmann told Retail Dive earlier this year. “We try to rather expand the market into the more premium space versus going straight into the heat of the competition, which undoubtedly is there.”
