Is On’s muted guidance the sign of a ‘dwindling’ brand?

Core Insights - Activewear brand On achieved annual net sales exceeding 3 billion Swiss francs ($3.8 billion) in 2025, marking a 30% growth compared to the previous year, with gross margins increasing to 62.8% from 60.6% [1][2] Financial Performance - In Q4 2025, On reported nearly 23% sales growth and a record gross margin of 63.9%, although net income decreased for both the quarter and the year, remaining positive overall [2] - Analysts from Telsey Advisory Group noted that all performance metrics exceeded expectations, attributing strong sales to high sell-through rates of footwear and balanced regional growth [2] Brand Strategy - CEO Martin Hoffmann emphasized the importance of building a premium brand, which is central to the company's culture and growth strategy, allowing On to differentiate itself in the market [3] - The company projected constant-currency sales growth of "at least" 23% for 2026 and gross margins of at least 63%, although this guidance was lower than analysts' expectations [3] Tariff Impact - On may face challenges related to tariffs in 2026, as the first quarter will reflect the full impact of the new tariff structure, which has not yet been fully realized in financial results [4] - Analyst Tom Nikic highlighted that the company's supply chain structure could lead to headwinds from tariffs, despite potential reductions in tariff rates compared to the previous year [4]