On Holding AG (ONON) Q4 2024: 33% Constant Currency Growth Validates Premium Sportswear Strategy
On Holding AG delivered a robust 33% constant currency net sales growth in 2024, driven by premium product innovation and global brand momentum. The company’s record 62.1% gross margin in Q4 underscores its effective DTC channel expansion and disciplined full-price strategy. Looking ahead, On targets at least 27% growth in 2025, supported by operational improvements and a strong innovation pipeline.
Summary
- Brand Momentum Fuels Growth: Strategic partnerships and retail expansion deepen global consumer engagement.
- Operational Discipline Drives Margins: Record gross profit margins reflect premium positioning and channel mix.
- Innovation and Market Expansion: New product launches and geographic growth underpin confident 2025 outlook.
Business Overview
On Holding AG is a Swiss-based premium sportswear company specializing in high-performance footwear, apparel, and accessories. The company generates revenue primarily through two segments: direct-to-consumer (DTC) channels, including e-commerce and owned retail stores, and wholesale distribution to strategic partners globally. On’s product portfolio centers on innovative running shoes and expanding apparel lines, supported by a growing global footprint across more than 80 countries.
Performance Analysis
In fiscal 2024, On achieved net sales of CHF 2.32 billion, marking a 33.2% increase on a constant currency basis, significantly exceeding prior guidance. This growth was driven by a 44.6% increase in DTC sales, which now represent a growing share of total revenue, reaching a record 48.8% in Q4. Wholesale sales also expanded robustly, up 26.3% constant currency, reflecting selective channel expansion and market share gains.
Gross profit margin expanded to 60.6% for the full year and reached a historic high of 62.1% in Q4, reflecting the premium brand positioning, disciplined full-price sales approach, and favorable foreign exchange impacts. Adjusted EBITDA margin improved to 16.7%, underscoring operational leverage despite increased investments in marketing and technology. Net income surged to CHF 242.3 million, a 204.5% increase year-over-year, supported by strong top-line growth and margin expansion.
- Regional Growth Acceleration: Asia-Pacific led with 95.6% constant currency growth, driven by China and Japan expansion, while Americas and EMEA showed solid double-digit increases.
- Product Franchise Strength: Running franchises such as CloudMonster and CloudSurfer grew between 60% and 140%, with apparel sales surpassing CHF 100 million and growing 51% constant currency.
- Retail Expansion Impact: Opening 19 new premium stores in iconic locations fueled brand awareness and elevated apparel sales, especially in Europe and emerging markets.
Overall, On demonstrated strong execution across channels and regions, validating its Dream On 2026 strategic roadmap and positioning for continued premium growth.
Executive Commentary
"Our 2024 financial results exceeded our expectations, filling us with confidence and excitement for the future. With a very strong constant currency growth rate of over 33%, we have reached 2.32 billion Swiss francs in net sales. This includes an expansion of our D2C share by more than three percentage points, extending our superpower to connect deeply with our fans through our own channels."
David Aleman, Executive Co-Chairman and Co-Founder
"We closed the year at 2.32 billion Swiss francs, with a gross profit margin of 60.6% and an adjusted EBITDA margin of 16.7%, showcasing our commitment to durable growth while investing for success in the long term. We have also proven the ability to drive significant positive cash flow, increasing our cash position to close to 1 billion Swiss francs."
Martin Hoffman, CFO and Co-CEO
Strategic Positioning
1. Premium Brand and Product Franchise Development
On’s focus on building a portfolio of strong product franchises such as CloudMonster, CloudSurfer, and the iconic Cloud has been pivotal. The recent soft launch of Cloud6, a refresh of the all-day staple, signals a return to core comfort and versatility, targeting broad consumer appeal and multi-generational reach. The LightSpray™ technology is positioned as a key innovation pillar for 2025, with plans to ramp up production capabilities in Zurich and South Korea, underpinning long-term scalable growth.
2. Direct-to-Consumer Channel Expansion
On’s DTC channel achieved a record 48.8% share of net sales in Q4, driven by significant online traffic and retail store expansion. The company opened 19 new flagship stores in prestigious locations such as Champs-Élysées in Paris and Rush Street in Chicago, reinforcing brand presence and driving premium product sales, particularly in apparel. This channel mix supports higher margins and stronger consumer engagement.
3. Global Market Penetration and Regional Growth
On’s geographic expansion is marked by robust Asia-Pacific growth, fueled by China and Japan, and accelerating presence in emerging markets like Latin America and Southeast Asia. Europe and the Middle East showed renewed momentum, especially in France and Italy, benefiting from retail store openings and heightened brand awareness. The Americas continue to be a key market with strong wholesale and DTC growth, underpinned by strategic partnerships and athlete endorsements.
4. Strategic Partnerships and Cultural Relevance
On’s partnerships with high-profile figures such as Roger Federer, Zendaya, and FKA Twigs have amplified brand visibility and cultural resonance, especially among younger consumers. These collaborations bridge performance and lifestyle, creating lasting brand loyalty and enhancing On’s positioning as a premium global sportswear brand rooted in innovation, design, and sustainability.
5. Operational Excellence and Automation
Investment in warehouse automation, particularly the fully automated Atlanta facility expected to go live in H1 2025, aims to improve operational efficiency and scalability. While a transition period with incremental costs is anticipated, this initiative is critical for supporting higher volumes and margin expansion in the medium term.
Key Considerations
On’s Q4 and full-year 2024 results reflect a company executing well on its strategic pillars but balancing growth with ongoing investments and operational improvements.
- Premiumization Drives Margin Expansion: Full-price sales and DTC growth support record gross margins, a key competitive advantage.
- Apparel Growth as a Differentiator: Apparel now exceeds CHF 100 million in sales and is targeted to reach 10% of total revenue, supported by retail and marketing initiatives.
- Geographic Diversification: Strong Asia-Pacific growth offsets regional disparities and supports global scale.
- Investment in Brand and Marketing: Increased upper-funnel marketing spend aims to sustain momentum among younger consumers and build long-term brand equity.
- Operational Risks with Automation: Warehouse automation is a strategic enabler but carries near-term cost and execution risks.
Risks
On faces risks including potential macroeconomic headwinds impacting consumer spending, execution challenges related to warehouse automation, and competitive pressures as larger players reinvigorate their running franchises. Foreign exchange volatility, particularly between the US dollar and Swiss franc, may also affect reported margins. The company’s reliance on premium positioning necessitates sustained brand relevance and innovation to maintain growth trajectories.
Forward Outlook
For fiscal year 2025, On expects at least 27% constant currency net sales growth, translating to at least CHF 2.94 billion at current spot rates. The company anticipates maintaining a gross profit margin around 60.5%, factoring in foreign exchange headwinds, and targets an adjusted EBITDA margin between 17.0% and 17.5%, progressing toward its 2026 goal of over 18%. Early 2025 momentum is strong with Q1 growth projected in the low to mid-30% range. Investments in innovation, retail expansion, and brand marketing will continue to support growth and premiumization.
Takeaways
On Holding AG’s 2024 results demonstrate the successful execution of its Dream On 2026 strategy, combining premium product innovation, strategic partnerships, and channel expansion to fuel robust growth and margin improvement.
- Growth and Profitability Alignment: The company’s ability to grow top line by over 33% constant currency while expanding gross and EBITDA margins reflects operational discipline and strong brand equity.
- Strategic Channel Mix Shift: Increasing DTC share to nearly 50% in Q4 enhances control over consumer experience and margin profile, underpinning sustainable profitability.
- Future Growth Drivers: Innovation pipeline with LightSpray™ and Cloud6, retail footprint expansion, and deepening global brand presence position On well for continued outperformance amid competitive and macroeconomic uncertainties.
Conclusion
On Holding AG’s fourth quarter and full year 2024 results validate the company’s premium sportswear growth strategy with strong brand momentum, operational execution, and financial discipline. The confident outlook for 2025, supported by innovation and market expansion, positions On to continue its trajectory toward becoming a leading global premium sportswear brand.
Industry Read-Through
On’s performance highlights the growing importance of premiumization and direct-to-consumer strategies in the sportswear industry. Its success in blending performance innovation with cultural relevance through partnerships offers a blueprint for competitors aiming to engage younger demographics. The company’s operational investments, including warehouse automation, signal a broader industry trend toward leveraging technology for scalable growth. Market participants should monitor On’s apparel growth and regional expansion as indicators of evolving consumer preferences and brand-building effectiveness in a competitive landscape.