By Layla Zulfa 
Zurich, Switzerland – On Holding AG, the rapidly ascending Swiss sportswear powerhouse, is poised for potentially enhanced profitability and accelerated growth in its crucial U.S. market, following a landmark Supreme Court decision that struck down certain government "emergency levies." CEO Martin Hoffmann confirmed this optimistic outlook on Tuesday, coinciding with the delivery of robust quarterly results that underscored the brand’s sustained momentum, even as its shares experienced an 11 percent dip in premarket trading amid broader market headwinds.
The Supreme Court’s intervention, which curtails the executive branch’s authority to impose specific temporary tariffs, has created a more favorable and predictable trade landscape for importers like On. This development is seen as a significant "upside" to the company’s already ambitious financial guidance, particularly regarding its annual profit margin projections.
Navigating the Complex US Tariff Landscape
The United States, representing On’s largest market, has been a dynamic and sometimes challenging environment for international trade. Just last week, the U.S. began collecting a new, temporary 10 percent blanket tariff on a range of imports, with plans to escalate this to 15 percent in the near future. This blanket tariff, while a new imposition, still stands significantly below other duties that have impacted On’s supply chain. Specifically, the company has contended with an additional 20 percent duty imposed last year on goods originating from key sourcing hubs such as Vietnam and Indonesia.
The Supreme Court’s ruling, by nullifying the legal basis for the government’s emergency levies, is anticipated to either prevent the full implementation of the planned 15 percent blanket tariff or to pave the way for a reduction in the existing 10 percent rate, and potentially even offer grounds for challenging other tariffs. While the specifics of the ruling’s direct impact on each tariff layer are still being assessed across the industry, Hoffmann articulated a clear vision for On. "If we see 15 percent becoming the new reality, this would be an additional upside to the guidance that we gave," he told Reuters, highlighting the immediate financial benefits expected from a reduced tariff burden.
Beyond prospective relief, On is actively pursuing refunds for tariffs already paid under what are now deemed unlawful levies. Hoffmann revealed that the company is among numerous entities that have filed for these tariff reimbursements. Crucially, any proceeds from these refunds will not be passed on to consumers in the form of lower prices. Instead, On plans to strategically reinvest these funds directly back into the business, a move designed to fortify its long-term growth, enhance its product innovation pipeline, and strengthen its global brand presence. This strategy underscores the company’s commitment to internal reinvestment as a driver of sustainable competitive advantage, rather than engaging in short-term price adjustments.
A Deep Dive into On’s Financial Resilience and Strategic Growth
The tariff news arrives as On continues to post impressive financial figures, demonstrating robust operational execution and strategic foresight. For the fourth quarter, the company reported a substantial 22.6 percent increase in sales, reaching 743.8 million Swiss francs (approximately $949.69 million). This performance significantly outstripped analyst expectations, which, according to data compiled by LSEG, had estimated sales closer to 724.3 million francs.
This strong quarterly showing was attributed, in part, to a deliberate strategy of limited discounting during the critical holiday season. In an economic climate where many retailers resort to aggressive price reductions to move inventory, On’s ability to maintain premium pricing points to the enduring strength of its brand and the high perceived value of its products.
Looking ahead, On’s financial outlook remains highly optimistic. The company forecasts at least 23 percent sales growth in 2026 on a constant-currency basis. While this represents a moderation from the exceptional 30 percent growth recorded in 2025, it nevertheless positions On to continue significantly outpacing larger, more established rivals such as Nike and Adidas, which typically operate at lower, single-digit growth rates in mature markets.
Furthermore, On projects an increase in its annual profit margin, targeting at least 63 percent, up from 62.8 percent in 2025. This margin improvement forecast is particularly noteworthy as it does not yet factor in the potential positive impact of lower U.S. tariff rates, suggesting that the actual margin could exceed this projection if the tariff relief materializes as expected. Adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) for the quarter rose by an impressive 31.8 percent, reaching 131 million francs, further cementing the company’s strong profitability trajectory.
The Premium Playbook: Targeting Affluent Consumers in a Polarized Economy
On’s success in navigating a challenging global economic landscape is largely attributable to its laser-focused strategy on affluent shoppers. In an increasingly polarized economy, particularly in the United States, consumers at different income levels have responded distinctly to inflationary pressures and economic uncertainties. Brands catering to lower-income demographics have often found themselves struggling as these consumers cut back on discretionary spending.
In contrast, On’s premium positioning, with running shoes starting at $150 and escalating upwards, has resonated strongly with a segment of the market less susceptible to economic volatility. This demographic prioritizes performance, innovation, and brand cachet, willing to invest in high-quality athletic footwear and apparel. Hoffmann emphasized this strategic advantage, stating, "The strong product pipeline that we have, the innovation that we bring to the market, and that premium position is really building momentum globally, and is resonating with the customer globally."
This strategy is not merely about pricing; it extends to product development, marketing, and distribution. On invests heavily in research and development to deliver cutting-edge technologies, such as its distinctive CloudTec cushioning system, which offers a unique running experience. Its marketing campaigns often feature elite athletes and emphasize performance and design, appealing to discerning consumers who value both function and aesthetics. The brand’s controlled distribution, favoring specialized running stores and its own direct-to-consumer channels, further reinforces its premium image and allows for a more curated customer experience.
Strategic Reinvestment: Fueling Future Growth and Innovation
On’s decision to reinvest tariff refunds rather than passing them to consumers is a strategic move with multi-faceted implications. Firstly, it allows the company to bolster its financial reserves, providing capital for continued expansion and market penetration. This could include further investment in direct-to-consumer channels, which typically offer higher margins and greater control over brand experience.
Secondly, reinvestment supports accelerated product innovation. The sportswear industry is intensely competitive, with brands constantly striving to offer superior performance and novel designs. By channeling funds into R&D, On can maintain its leadership in technological advancements, ensuring its product pipeline remains robust and compelling. This is critical for retaining its premium market position and attracting new customers.
Thirdly, these funds can be allocated to brand building and marketing initiatives. While On has achieved significant brand recognition, sustained investment in marketing, particularly in new and emerging markets, is essential for global expansion. This includes sponsorships, digital campaigns, and experiential marketing designed to deepen customer loyalty and introduce the brand to new demographics.
Finally, the reinvestment supports On’s ambitious retail expansion plans. The company intends to open 10 to 15 new stores this year, strategically located in key urban centers and high-traffic retail destinations globally. These stores serve not only as sales points but also as brand experience hubs, allowing customers to fully immerse themselves in the On universe and receive personalized service. By not immediately reducing consumer prices, On maintains its premium pricing power, signaling confidence in its product value and avoiding potential brand dilution that can accompany frequent discounting.
Broader Industry and Economic Implications
The Supreme Court’s ruling on emergency levies carries broader implications beyond On Holding. For the wider sportswear industry and other sectors reliant on international supply chains, such judicial oversight can introduce greater predictability into trade policy. This certainty allows companies to make long-term investment decisions regarding sourcing, manufacturing, and market entry with reduced risk of sudden tariff impositions.
For competitors of On, particularly those also sourcing from countries like Vietnam and Indonesia, a reduction in U.S. tariff rates could offer similar relief, potentially leveling the playing field. However, On’s proactive stance in seeking refunds and its strategic reinvestment plan suggest it is well-positioned to capitalize on these changes more effectively, potentially widening its competitive lead. The ruling may also encourage other companies to challenge existing tariffs that might have been imposed under similar executive authorities.
For U.S. consumers, while On is not directly reducing prices, the overall impact of lower tariffs across various industries can lead to more stable or even decreasing prices for imported goods in the long run. In the immediate term, On’s reinvestment strategy aims to deliver value through enhanced products and services, rather than direct price cuts.
The Competitive Landscape: On’s Ascent Amidst Giants and Rivals
On’s sustained growth is particularly noteworthy when viewed against the backdrop of the broader athletic footwear and apparel market. While industry giants like Nike and Adidas grapple with challenges ranging from inventory management to shifting consumer preferences and slower growth in mature markets, On has carved out a distinct and rapidly expanding niche.
The article’s accompanying context, "Why Hoka Is Slowing and On Keeps Growing," further illuminates On’s strategic success. Both On and Hoka emerged as disruptors in the performance running shoe segment, offering innovative cushioning and design. However, On’s consistent focus on premium positioning, coupled with a wider appeal that extends beyond hardcore runners to lifestyle consumers, appears to be giving it an edge. While Hoka has experienced some moderation in its meteased growth, On continues to accelerate, demonstrating greater agility and a more effective brand strategy in capturing market share.
On’s global momentum is not just about running shoes. The brand has successfully expanded into apparel, accessories, and other categories, building a comprehensive offering that resonates with its target demographic. Its strategic partnerships and endorsements, while carefully selected, have also helped elevate its profile and solidify its premium image.
Outlook and Future Trajectory
On Holding’s outlook remains decidedly bullish. With robust financial performance, a clear strategic direction centered on premiumization and innovation, and the potential tailwind from more favorable U.S. tariff rates, the company is well-positioned for continued expansion. The planned store openings underscore its commitment to building a global physical presence that complements its strong online sales channels.
Key factors for sustained growth will include the company’s ability to maintain its pace of product innovation, effectively manage its supply chain in a volatile global environment, and successfully execute its retail expansion plans. While broader market declines in premarket trading indicate that even strong performers are not immune to macroeconomic sentiment, On’s fundamental strength and strategic agility suggest it is well-equipped to navigate these challenges.
In conclusion, On Holding is demonstrating remarkable resilience and strategic acumen in a complex global market. The Supreme Court’s tariff ruling, coupled with its strong financial performance and unwavering commitment to its premium strategy, positions the Swiss sportswear brand for an even more dynamic growth trajectory, reinforcing its status as a significant challenger to established industry leaders.