Dive Brief:
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Athleticwear brand On posted record Q1 net sales of 831.9 million Swiss francs (about $1.06 billion at press time), up 14.5% year over year. This is the first time the company has topped 800 million Swiss francs in quarterly net sales, per a Tuesday release.
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Net sales in the Americas grew approximately 3% for the quarter, while Asia-Pacific soared just over 44% and Europe, the Middle East and Africa increased about 23%. DTC net sales were up 16.4% with wholesale up 13.3%.
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Meanwhile, gross profit margin reached a record 64.2%, setting what outgoing CEO Martin Hoffmann told analysts was a new baseline for the year “despite the increasing headwind from higher U.S. tariffs.” Net income rose by 82.2%, with a net income margin of 12.4%.
Dive Insight:
In his last earnings call with the company, Hoffmann said that “the company is stronger than ever.” In particular, he said DTC channel growth led the strong quarterly performance, while wholesale outperformed expectations.
Hoffmann added that apparel sales continued to be a powerful consumer entry point into the brand, with net sales for the category up 45.1% for the quarter. Footwear, which is still the company’s largest division, posted net sales growth of about 12%, with accessories, which represents the smallest share, growing by 70.7%.
“What's embedded in our guidance is a continued very strong growth of our DTC channel, similar to the strong growth rate that we have now seen in the first quarter,” Hoffmann said. “So that implies a slower growth on wholesale compared to that strong growth in DTC, which basically ultimately leads to the continued share gain of our DTC business. We have a lot of innovation coming early ’27. And so we want to be cautious that we start into that firework of innovation with clean inventory levels in our wholesale partners.”
In the U.S., awareness crossed the 30% threshold despite showing only modest growth. Caspar Coppetti, the company’s co-founder and incoming co-CEO, told analysts that part of that engagement came from an uptick in younger audiences, and more women customers, all of whom were targeted by the company’s recent collaboration with actor Zendaya.
“We still have a long way to go in terms of growth,” Coppetti said. “But what we're really seeing and what we're particularly excited about is that we're not just repeating our running customers, but we're actually reaching new audiences.”
David Allemann, also a co-founder and incoming co-CEO, reiterated the strength of On’s DTC channel, and said it now accounts for more than 10% of the company’s apparel share.
“So a lot of these young consumers that are coming into our e-com, that are coming to our stores, are actually apparel-first consumers, which is amazing, and we're sure that they're going to expand to footwear as well,” Allemann said on the call.
On the heels of its strong first quarter results, the company raised its guidance. On now expects gross profit margin to reach at least 64.5%, with an adjusted EBITDA margin in the range of 19.5% to 20%. Net sales outlook remained “at least 23%,” with Coppetti telling analysts that “this outlook assumes 20% incremental tariff rates from Vietnam and excludes any potential refunds.”
In March, On’s unexpected announcement regarding Hoffmann’s departure came alongside news of a wider executive shuffle. The company revealed that Allemann and Coppetti would become co-CEOs and board co-chairs, while co-founder Olivier Bernhard would remain as a board executive. Scott Maguire, formerly chief innovation officer, was promoted to president and chief operating officer.
Earlier in the year, Frank Sluis was appointed chief financial officer, taking over a position that Hoffmann had held for 13 years, even during his tenure as the company’s chief executive.
