On Holding's Q1 revenue surpasses 800 million Swiss francs for the first time; North America slows down, Asia-Pacific surges.

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On May 12, Swiss premium sports brand On Running released its financial report for the first quarter ending March 31, 2026.

According to the financial report, On Running's net sales during the period reached 831.9 million Swiss francs, a year-on-year increase of 14.5%, with quarterly revenue surpassing the 800 million CHF mark for the first time. If calculated at constant exchange rates, the actual growth rate was as high as 26.4%. Net profit surged 82.2% year-on-year to 103.3 million CHF; adjusted net profit reached 123.6 million CHF.

Based on the first quarter’s profit performance, On Running raised its profit margin guidance for the 2026 fiscal year.

Against the backdrop of pressure in the global sports consumer market, On Running maintained growth by adjusting its full-price strategy and product structure, but the slowdown in its largest single market, North America, and uncertainties from tariff policies remain variables that require ongoing attention.

The most core data in this quarter’s financial report points to a significant improvement in profitability indicators. From the data, On Running’s gross profit for the quarter reached 534.3 million CHF, a year-on-year increase of 22.8%; gross profit margin jumped from 59.9% in the same period last year to 64.2%, up by 430 basis points.

The substantial expansion of gross profit margin is mainly attributed to three business-level adjustments:

First is the strict implementation of the full-price sales strategy; restrained discounting and promotions reduced the erosion of profits and maintained the brand’s premium positioning;

Second is the decrease in air freight costs, along with favorable exchange rate factors, optimizing the cost side;

Third is the increase in the proportion of DTC channel sales.

Additionally, adjusted EBITDA increased 45.4% year-on-year to 174.3 million CHF, with EBITDA margin rising to 21.0%.

It is worth noting that this profit level was achieved despite digesting existing external cost pressures.

Management explicitly mentioned in the financial report that currently, some products imported from Vietnam to the US face an incremental 20% tariff, but enhanced brand premium power and improved supply chain efficiency partially offset this negative impact.

On the channel side, On Running is attempting to find a balance between expanding market reach and maintaining brand tonality.

In the first quarter, DTC net sales increased 16.4% year-on-year to 322.3 million CHF; wholesale channel net sales grew 13.3% to 509.6 million CHF.

DTC growth continues to outpace wholesale, reflecting a strategic tilt towards channel control.

In recent years, to avoid chaos in the price system caused by over-reliance on distribution networks, On Running has conducted strict selection and partial contraction of wholesale channels in some mature markets, while increasing investment in self-operated stores and its official website.

This DTC-centric operation model requires higher offline store construction and marketing costs in the initial stage, but from a long-term financial model perspective, it helps improve per-store efficiency and expand overall gross margin space.

In terms of regional performance, global market differentiation is increasingly evident.

The Asia-Pacific market became the strongest growth engine this quarter. Data shows Asia-Pacific’s net sales in Q1 surged 44.4% year-on-year to 174 million CHF, with its share of total revenue rising above 20%. Among them, the Chinese market achieved double-digit growth, with apparel category penetration reaching 30%, far exceeding the company’s global average of about 6%.

Europe, Middle East, and Africa performed solidly, with net sales rising 22.8% to 207.1 million CHF. However, as On Running’s largest single market, the Americas only saw a slight 3.1% increase in net sales to 450.7 million CHF in Q1. The marked slowdown in North America is directly related to sluggish local sports goods consumption and fierce competition from brands such as Nike and Hoka.

In terms of category performance, core footwear business remains the foundation, with Q1 sales at 763.7 million CHF, a year-on-year increase of 12.2%.

Meanwhile, the apparel business shows potential for a second growth curve, with sales in the quarter up 45.1% to 55.3 million CHF. The expansion of the apparel category not only broadens the brand’s usage scenarios—extending from professional running to daily commuting and lifestyle—but also provides richer bundled sales opportunities in stores.

Based on Q1’s financial performance, On Running maintains its forecast for at least 23% net sales growth for the full 2026 fiscal year (at constant exchange rates).

Converted at current exchange rates, full-year revenue is expected to be at least 3.51 billion CHF. For profit expectations, the company raised its gross margin guidance for the year to at least 64.5%, with adjusted EBITDA margin forecast range remaining at 19.5% to 20.0%.

From a business fundamentals perspective, On Running remains in its global expansion phase, delivering high-quality single-quarter profit results.

But objective risks remain: On one hand, US tariff policy may continue to exert pressure on future supply chain costs; on the other hand, as of the end of Q1, the company’s net working capital increased 14.1% year-on-year to 650.8 million CHF.

Against the backdrop of slowing growth in core regional markets, how to maintain a healthy inventory turnover rate globally and prevent the risk of inventory backlog will be a core test of management's operational capabilities going forward.

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