Analyst Predicts That On’s Footwear Growth Could Decelerate: Here’s Why
As On Holding AG makes big changes in the C-Suite, growth is more likely to come in 2025 from an increase in apparel sales than from its footwear categories.
“Overall, we continue to see On as a unique story with multiple avenues for growth globally through owned store, wholesale distribution, and product assortment expansion,” noted Telsey Advisory Group analyst Cristina Fernández in a research note on Tuesday.
While she expects that On can extend its brand momentum in 2025 through product launches —Cloudsurfer2 running shoe, Cloud 6 lifestyle footwear, and Cloudzone, a new style — other avenues include 20 to 25 store openings, 5 percent to 6 percent in wholesale store growth — and an increase in apparel penetration.
She noted that the company performed “very well” in the second half of 2024, with broad-based strength across consumer groups, distribution channels and geographies.
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“While tariff announcements are creating uncertainty in the U.S. economy, On is more insulated as it manufacturers a majority of its products in Vietnam and has little exposure to tariffs on Chinese imports,” the analyst said. “These factors give us confidence in On’s ability to reach its 2025 guidance.”
For the fourth quarter ended Dec. 31, the Zurich-based sports brand post net income of 89.5 million Swiss francs, against a loss of 26.8 million Swiss francs in the same year-ago period. Adjusted net income was 107.7 million Swiss francs versus a loss of 16.3 million francs a year ago. Net sales in the quarter rose 35.7 percent to 606.6 million Swiss francs.
Co-CEO and chief financial officer Martin Hoffman said during the firm’s quarterly earnings conference call at the time that net sales from shoes rose 33.6 percent to 568.8 million Swiss francs.
For 2024, the brand said net income rose 204.5 percent to 242.3 million Swiss francs, on a net sales increase of 29.4 percent to 2.32 billion Swiss francs. Helping the sales gain was a 40.3 percent increase in net sales in the direct-to-consumer channel and a 22.8 percent rise in net sales in wholesale sales.
TD Cowen retail analyst John Kernan in a post-earnings analysis said On is “redefining premium innovation” across the lifestyle and performance categories, with management building an increasingly durable growth strategy into 2025. That conclusion earned the company a “Europe Best Idea in ’25” status from TD Cowen.
But Jefferies retail analyst Randal J. Konik, who initiated coverage on shares of On, voiced some caution on growth prospects, at least for footwear. He said On’s footwear sales grew 29 percent in 2024, versus 47 percent growth in 2023 and 71 percent in 2022, and noted that the brand grew “remarkably over the last five years,” with sales growth driven by its footwear segment. According to Konik, the deceleration in footwear sales growth is shifting toward a “more normalized rate.”
He is projecting 25.6 percent growth in footwear sales in 2025 and an 18.5 percent increase in 2026. The retail analyst also noted that On has established a “formidable” presence in the athletic footwear market, with a 2 percent global share in 2024. That has the brand trailing behind Skechers at a 2.9 percent share and Asics at 3 percent.
“However, the phase of easy expansion through new distribution channels, particularly in the saturated U.S. market, has largely matured,” Konik concluded. “Global brand awareness remains limited in critical region like [the Asia Pacific], and the absence of a meaningful apparel business prevents on the evolving into a true lifestyle sportswear brand, capping its total addressable market compared to peers like Nike.”
Despite the small foothold of On’s apparel and accessories share in the athletic apparel market, Konik sees “solid growth in both segments, driven by low starting bases,” although he doesn’t expect either category to gain meaningful share in the near-term.
Konik also expressed another concern, and that is that Nike’s reduced wholesale penetration from 65 percent to 56 percent over the last five years created an opening for On to expand. “However, with retailers now recommitting to Nike, On may face challenges in securing additional shelf and open-to-buy, further curbing its momentum,” the retail analyst said.
Separately, Tuesday also saw the disclosure that co-CEO Marc Maurer will leave the firm after 12 years. Maurer will stay on through June, and then become an advisor through March 2026. Hoffman will transition to the firm’s sole CEO. On is bolstering its C-suite, adding a chief people officer, chief innovation officer, chief communications officer and chief supply chain officer.
On isn’t the first footwear firm to transition to a single CEO. In May 2023, San Francisco-based footwear maker Allbirds disclosed in a regulatory filing that co-founder and co-CEO Tim Brown would become co-founder and chief innovation officer.
That move left Allbirds co-founder Joey Zwillinger as the firm’s sole CEO. Zwillinger eventually stepped down in March 2024, with Joe Vernachio, former chief operating officer, taking on the CEO post. Both Brown and Zwillinger remain as members on Allbirds’ Board of Directors.
