Key Points

On Holding posted solid 43% top-line growth, showing no signs that demand for its high-end running shoes and other athletic apparel is waning. The company saw growth in both its wholesale and direct-to-consumer operations, with direct-to-consumer representing about 38% of total sales in the quarter. On Holding raised its full-year sales growth guidance, believing that demand for its products is strong enough to overcome any higher prices due to tariffs. 10 stocks we like better than On Holding ›

Here's our initial take on On Holding's (NYSE: ONON) fiscal 2025 first-quarter financial report.

Key Metrics

Metric Q1 2024 Q1 2025 Change vs. Expectations Revenue (Swiss francs) 508.2 million 726.6 million 43% Beat Adjusted EPS (Swiss francs) 0.33 0.21 -36% Met Gross profit margin 59.7% 59.9% 20bp n/a Direct-to-consumer sales (Swiss francs) 190.5 million 276.9 million 45% n/a

On Holding Outruns Global Uncertainty

On Holding's impressive growth machine showed no sign of slowing in the quarter, with the company reporting 43% revenue growth and improvements to gross profit margin.

The growth is coming from both wholesale sales and direct-to-consumer. At quarter's end, direct-to-consumer represented 38.1% of total sales, in line with the percentage from a year ago.

With tariffs front of mind, investors are more focused on what is to come than on the recent results. On increased its full-year net sales outlook to "at least" 28% growth (on a constant-currency basis), up from at least 27% three months ago. But it won't come easy, given the environment.

The company said that "recent global trade policy shifts have introduced higher levels of planning uncertainty, including the potential for increased customs and freight expenses, general volatility within the global supply chain, as well as the material depreciation of all key operating currencies against the Swiss Franc." The company said that as a result, it is "embedding this higher degree of uncertainty in its outlook."

On continues to see strong demand across all channels and regions. On has positioned itself as a premium footwear and athletic apparel company, and management appears to be banking on that strong demand giving it pricing power to offset any higher costs due to tariffs.

Immediate Market Reaction

Investors appear to like what On had to say in its report. On Holding shares were up about 6% in premarket trading ahead of the New York market's open.

What to Watch

The company's confidence about its ability to navigate through shifts in global trade was reassuring, but investors will likely be hanging on every word from management about the retail environment both in North America and around the globe.

Story Continues

On said the launch of its new Cloudsurfer 2 and Cloud 6, with the help of celebrities including Zendaya, was a success. This is a company that has fueled its growth around buzz-worthy product introductions, and investors will likely want to hear what's next in the product pipeline.

Finally, On's somewhat unusual use of co-CEOs will come to an end on July 1, when Marc Maurer steps down and leaves co-CEO and CFO Martin Hoffmann in charge. The transition is gradual, and shareholders were given plenty of notice, but it is something to watch as investors look for reassurance that this impressive growth story can continue.

Helpful Resources

Full earnings report Investor relations page Additional coverage

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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool recommends On Holding. The Motley Fool has a disclosure policy.

ONON: Keeping Pace Despite Headwinds was originally published by The Motley Fool

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