On Holding AG Q3 FY2026 earnings call

• Premium Strategy Execution: Management reaffirmed the 'On Premium Playbook,' prioritizing full-price discipline and innovation over promotional volume. This strategy resulted in record gross margins (66.9%) and adjusted EBITDA margins (21.9%).
• Product Innovation: The CloudSurfer 3 launched with exceptional sell-through rates (4x its predecessor). LightSpray technology demand exceeded supply, driving significant interest following the football announcement.
• Category Growth: Apparel is a key growth engine (+38%), driven by women's training products and collaborations (e.g., Zendaya). Training footwear (Cloud X) became the fourth largest franchise.
• Regional Dynamics: APAC showed strong momentum (+31.9%), particularly in Japan and Korea, though management emphasized deliberate, controlled pace rather than aggressive expansion. Americas saw improved wholesale sellouts due to better inventory management.
• Retail Expansion: DTC share rose to 42.2%. New flagship stores opened in Copenhagen, San Francisco, and São Paulo, with productivity gains led by apparel. The store fleet is on track to reach ~180 doors within three years.

Net sales reached a record 931.4 million Swiss francs, representing 17.8% growth at constant currency. The Americas contributed 490.1 million CHF (52.6% of revenue), growing 12.4%. EMEA contributed 252.3 million CHF (27.1% of revenue), growing 19.1%. Asia Pacific contributed 189.9 million CHF (20.4% of revenue), growing 31.9%. By channel, Wholesale accounted for 538.2 million CHF (57.8% of revenue), while Direct-to-Consumer (DTC) accounted for 393.3 million CHF (42.2% of revenue). By category, Footwear grew 16%, Apparel grew 38%, and Accessories grew 40.2%; Apparel and Accessories combined now represent over 9% of total sales.

• Full Year Net Sales: Reiterated guidance for low 20% constant currency growth.
• Gross Margin: Raised outlook from 'at least 65%' to 'around 66%' (excluding tariff refunds), reflecting full-price commitment and scale efficiencies. Including tariffs, expected around 67.5%.
• Adjusted EBITDA Margin: Maintained range of 19.5% to 20.0% (excluding tariffs). Including tariffs, expected in the range of 21.0% to 21.5%.
• Q4 Expectations: Planning for acceleration in Q4 growth, predominantly DTC-led, despite a highly promotional industry environment.

• Promotional Environment: The broader market remains highly promotional, which could pressure consumer spending and competitor pricing strategies.
• Supply Chain Constraints: Demand for LightSpray products currently exceeds production capacity; defect rates are being managed but remain a factor as production scales.
• Execution Risk: Achieving the ambitious 2029 targets requires successful scaling of new technologies (SuperFoam, LightSpray) and new sports categories (Football, Golf) without diluting brand equity.
• Inventory Management: While partner inventory is healthy, any misalignment between sell-in and sell-out could lead to future discounting pressures.

Q: Analyst asked about APAC growth trajectory and China potential given current strong performance in Japan/Korea. / A: Caspar noted APAC has high untapped demand, especially in tier 1/2 Chinese cities where On is now #2 premium brand. They prioritize paced, profitable growth over rapid expansion during promotional periods like Double 11. Frank clarified mid-high 20s growth is the long-term plan (2027-29), not a specific Q4 forecast.

Q: Analyst inquired about LightSpray technology penetration timeline and supply chain investments. / A: Caspar stated LightSpray demand surged post-football announcement. Production is ramping with Vietnam factory coming online soon to double capacity. Defect rates have improved to ~5%. Full technology potential across lifestyle franchises expected by 2028.

Q: Analyst asked if US wholesale promotional environment is improving and how DTC vs Wholesale mix will shift in Q4. / A: Caspar said US wholesale remains promotional but On is unaffected due to full-price focus. Frank noted Q3 wholesale was boosted by retailer pull-forwards; Q4 growth will accelerate and be DTC-led. Sellouts are outpacing sell-ins, ensuring healthy inventory.

Q: Analyst asked about Run Specialty channel trends and Lifestyle shelf space gains amidst market slowdown. / A: Caspar highlighted exclusive early access for Run Specialty partners drove strong order rates. In Lifestyle, despite market decline, On gained share via CloudTilt and new silhouettes (Cloud Nova/Muse). Partners are willing to trial new styles due to On’s strong innovation pipeline.

Q: Analyst asked about drivers for DTC acceleration in Q4 and LightSpray capacity details. / A: David cited younger customers (<24 doubled YoY), bigger baskets mixing footwear/apparel, and new retail openings. Anna Andreeva followed up on Vietnam factory; Caspar confirmed it will double capacity and allow for more product variety/piloting closer to consumers.