Group 1 - On Holding (NYSE: ONON) is experiencing growth driven by strong international expansion, diversification in its product portfolio, and an increased presence in the direct-to-consumer channel [1] - The company's growth strategies are expected to serve as a foundation for future growth [1]

Group 1 - Sands Capital's "Global Growth Strategy" reported a portfolio return of 21.7% in Q2 2025, outperforming the MSCI ACWI index which returned 11.5% [1] - The second quarter results marked the fourth best performance since the fund's inception in 2008, both in absolute and relative terms [1] - The fund's top five holdings can be referenced for insights into its best investment picks for 2025 [1] Group 2 - On Holding AG (NYSE:ONON) experienced a one-month return of -4.91% and a 52-week decline of 15.55%, closing at $43.02 per share with a market capitalization of $14.048 billion on September 16, 2025 [2] - On Holding AG was identified as one of the top individual absolute detractors in the Sands Capital report, alongside Atlassian, Nike, Builders FirstSource, and Carlisle Companies [3] - The number of hedge funds holding On Holding AG decreased from 53 to 42 from the previous quarter, indicating a decline in popularity among hedge funds [4]

Industry Overview - The sportswear industry is experiencing rapid growth, driven by secular trends [1] - On Holding AG (NYSE: ONON) is highlighted as a strong performer within the industry [1] Investment Analysis - The analysis focuses on identifying undervalued stocks with growth potential, emphasizing a fundamental approach [1]

Investment Rating - The industry investment rating is "Outperform" (maintained) [1] Core Viewpoints - The report highlights the rapid growth of the Swiss brand On, which has increased its revenue from 270 million Swiss francs in 2019 to 2.32 billion Swiss francs by 2024, achieving a compound annual growth rate (CAGR) of 54% [2][19] - The brand's market share in the U.S. has significantly increased from 0.2% in 2019 to 1.7% in 2024, indicating strong competitive positioning [25] - On's sales channels are balanced between wholesale and direct-to-consumer (DTC), with 59% of sales from wholesale and 41% from DTC as of 2024 [37] Summary by Sections Company Overview - On was founded in 2010 by former triathlon world champion Olivier Bernhard and has innovatively integrated rubber hose prototypes into running shoe designs, launching products with CloudTec® cushioning technology [2][10] - The brand has expanded globally, entering the U.S. and Japan in 2013 and China in 2018, with a strong focus on the Asia-Pacific region, which is expected to grow by 84% from 2021 to 2024 [19][25] Financial Performance - Revenue growth from 2019 to 2024 is attributed to the brand's global expansion strategy, with the Americas contributing 1.48 billion Swiss francs in 2024, accounting for 64% of total revenue [25] - The gross margin has improved from 54% in 2019 to 61% in 2024, while operating profit margins (OPM) are expected to stabilize between 7% and 10% from 2022 to 2024 [19][11] Product Strategy - On's product line is heavily focused on footwear, which accounted for over 95% of revenue in 2024, with plans to expand its apparel segment significantly in the coming years [62] - The brand's innovative technologies, such as CloudTec® and LightSpray™, are central to its product development, enhancing performance and sustainability [65][64] Marketing and Brand Positioning - On has engaged high-profile athletes, including Roger Federer, to enhance brand visibility and credibility, while also leveraging social media and community engagement in China [3][19] - The brand's marketing strategy includes a focus on professional athletes and community-driven initiatives to penetrate the core consumer base in emerging markets [3][19] Channel Strategy - The company has established a robust wholesale network with 10,500 retail partners globally, while also developing its DTC channels through e-commerce and owned retail stores [29][36] - In China, On has opened multiple retail locations, including a flagship store in Chengdu, aiming to increase its market share significantly [46][47]

Core Insights - The retail sector is showing resilience despite trade tariffs, with companies like Urban Outfitters, Dutch Bros, and On Holdings presenting potential investment opportunities [3][4][5]. Urban Outfitters - Urban Outfitters has a 12-month stock price forecast of $81.91, indicating a 14.80% upside from the current price of $71.35 [4]. - The company reported earnings per share (EPS) of $1.58, exceeding the expected $1.44 by approximately 10% [6]. - Analysts have mixed views, with a consensus Hold rating but some recommending a Buy with a target price of $93, suggesting a potential upside of 38.8% [7]. Dutch Bros - Dutch Bros has a 12-month stock price forecast of $80.06, representing a 12.15% upside from the current price of $71.39 [9]. - The company reported an EPS of 26 cents, surpassing the consensus of 18 cents by 44.4% [11]. - Analysts maintain a consensus Buy rating, with some valuing the stock at $86, indicating a 20% upside potential [12]. On Holdings - On Holdings has a 12-month stock price forecast of $64.20, indicating a 40.60% upside from the current price of $45.66 [13]. - The company is shifting focus to wholesale operations, which may impact short-term cash flow but could enhance economies of scale and profit margins [14]. - The stock is currently rated as a Moderate Buy, with a consensus target of $64.20, suggesting a 42.5% upside potential [14].

Group 1 - The current market trend shows a significant shift as investors are favoring large-cap tech stocks over small and mid-cap growth stocks during the Q2 earnings reporting period for the S&P 500 [1] - Gary Alexander, with extensive experience in technology and startups, highlights the ongoing themes influencing the industry, indicating a strong focus on large-cap technology companies [1] Group 2 - The article emphasizes the importance of understanding market dynamics and investor behavior, particularly in the context of earnings reports and sector performance [1]

Core Viewpoint - The company reported a significant increase in net sales but faced a drastic decline in net profit, indicating a challenging balance between growth and profitability [1][3]. Sales Performance - For Q2 of FY2025, the company achieved a net sales increase of 32% to 749 million Swiss francs, with the Asia-Pacific market showing a remarkable growth of 101.3% to 119 million Swiss francs [1][2]. - The EMEA region also saw a solid growth of 42.9% to 198 million Swiss francs, while the Americas experienced a more modest growth of 16.8%, reaching 432 million Swiss francs, maintaining the largest market share globally [2]. Profitability Challenges - Despite the surge in sales, the company reported a net loss of 40.9 million Swiss francs for Q2 of FY2025, a stark contrast to a profit of 30.8 million Swiss francs in the same period last year, resulting in a net profit margin decline from 5.4% to -5.5% [3]. - The company has been in a cycle of increasing revenue without corresponding profit growth since 2024, with a notable 48% drop in net profit in Q3 of FY2024 despite a 32.3% revenue increase [3]. Expansion and Marketing Strategy - The company has been aggressively expanding its store presence in China, with plans to reach 100 stores by 2026, reflecting a strong focus on the Chinese market, which is expected to account for 10% of global sales [4]. - Marketing expenses have risen significantly, with 10.9% of net sales allocated to marketing in 2023, and sales costs increasing by 26.82% to 288 million Swiss francs in Q2 of FY2025 [5]. Market Position and Competition - The company is facing increasing competition in the Chinese running shoe market, with several brands vying for the same middle-class consumer base, which could impact its market share [5]. - As of August 15, 2025, the company's stock price had dropped by 19.28% since the beginning of the year, reflecting a loss of confidence in the capital markets despite growing consumer foot traffic in stores [5]. Future Considerations - The company must manage the negative impacts of brand expansion by controlling expense growth, stabilizing gross margins, and transitioning to a profitability model as revenue growth slows [6].

Core Viewpoint - On Holding AG, a Swiss sports brand known for its high-performance running shoes, has achieved significant growth, with revenue surpassing 1 billion Swiss francs in 2022 and projected to reach 2.318 billion Swiss francs in 2024, doubling its performance in just two years [2] Group 1: Financial Performance - The company aims for revenue of at least 3.55 billion Swiss francs (approximately 29.05 billion RMB) from fiscal year 2024 to 2026, with the Chinese market playing a crucial role in achieving this target [2] - In Q2 of fiscal year 2025, the company reported a net sales increase of 32% to 749 million Swiss francs, with the Asia-Pacific market seeing a remarkable 101.3% growth to 119 million Swiss francs [3] - Despite the sales growth, the company experienced a net profit decline of 232.7%, shifting from a profit of 30.8 million Swiss francs in the previous year to a loss of 40.9 million Swiss francs, attributed to foreign exchange losses due to the appreciation of the Swiss franc [3] Group 2: Market Strategy - The company has identified China as one of its top five global markets, with plans to expand its presence by opening more stores, aiming for 100 locations by 2026, particularly in first- and second-tier cities [3] - The management is prioritizing market share and brand strength over short-term profits, a strategy previously seen in companies like Nike and Lululemon [5] - The future challenge lies in managing expense growth, maintaining gross margins, and transitioning to a profit model as revenue growth slows [5]

Core Viewpoint - On Holding AG, a Swiss sports brand known for its high-performance running shoes, has experienced rapid growth, achieving over 1 billion Swiss francs in revenue for the first time in 2022 and projected to reach 2.318 billion Swiss francs in 2024, doubling its revenue in just two years [3][4]. Group 1: Company Performance - On Holding AG is recognized as the "Apple of the running world" due to its innovative technology and unique product experience, which have disrupted the industry [3]. - The company has adopted a global growth strategy focusing on stable growth in Europe and North America while rapidly expanding in Asia, particularly China, which is expected to become its second-largest market [4]. - For the fiscal year 2025 Q2, On reported a net sales increase of 32% to 749 million Swiss francs, with the Asia-Pacific market seeing a remarkable 101.3% growth to 119 million Swiss francs [4]. Group 2: Financial Challenges - Despite the revenue growth, On Holding AG reported a significant net profit decline of 232.7%, shifting from a profit of 30.8 million Swiss francs in the previous year to a loss of 40.9 million Swiss francs, attributed to foreign exchange losses from the appreciation of the Swiss franc [4][5]. - The company's management is prioritizing market share and brand strength over short-term profits, a common strategy in the fast-moving consumer goods and sportswear sectors [5]. - The future challenge lies in managing expense growth, maintaining gross margins, and transitioning to a profit model as revenue growth slows; failure to balance these factors could lead to a scale trap and increased losses [5].

Core Viewpoint - On Holding AG has demonstrated strong performance in the Chinese market, achieving rapid revenue growth through a global strategy of "steady growth in Europe and America, rapid breakthroughs in Asia" while facing challenges with profitability [1][2] Group 1: Company Performance - On Holding AG's revenue surpassed 1 billion Swiss francs for the first time in 2022, reaching 2.318 billion Swiss francs in 2024, doubling its performance in just two years [1] - The company aims to achieve a revenue target of at least 3.55 billion Swiss francs (approximately 29.05 billion RMB) from fiscal year 2024 to 2026, with the Chinese market playing a crucial role in this goal [1][2] Group 2: Market Expansion - China has become one of On Holding AG's top five global markets and is expected to rise to the second-largest market in the future, with plans to open more stores in the next five years, reaching 100 stores by 2026 [2] - The company reported a 32% year-on-year increase in net sales to 749 million Swiss francs for Q2 of fiscal year 2025, with the Asia-Pacific market seeing a remarkable 101.3% growth to 119 million Swiss francs [2] Group 3: Profitability Challenges - Despite increasing sales, On Holding AG's net profit plummeted by 232.7%, shifting from a profit of 30.8 million Swiss francs to a loss of 40.9 million Swiss francs, attributed to foreign exchange losses due to the appreciation of the Swiss franc [2] - Financial expert Chen Jingjing noted that while revenue and gross profit are growing, net profit is pressured by non-recurring expenses, indicating a strategy of sacrificing short-term profits for market share and brand strength [3]