On's Deliberate Wholesale Brake: Protecting Premium While DTC Surges
Q2 beats on DTC and margins, but full-year growth guided down as On pulls back from a promotional wholesale channel to defend full-price integrity.
ONON · Earnings Call · 2026-08-11
The Price of Premium
On Holding AG's second-quarter print, for the quarter ending June 30, 2026, masqueraded as a blowout: net sales of CHF 850 million, up 21.6% at constant currency, with DTC soaring 34.3% to a record 45.7% of sales and an industry-leading gross margin of 65.4%. But the company's decision to revise full-year growth guidance down to the 'low 20s' from the prior 23% reveals a deliberate strategy shift. As founder and co-CEO David Allemann put it, “We have been intentional and disciplined on managing sell-in to the channel within this environment. Most importantly, we choose not to build in-channel inventory that could compromise our full price integrity.” — David Allemann, Founder and Co-CEO · 2026-08-11 This is a clear pivot from the growth-at-all-costs posture of prior quarters, where management emphasized that "the strong momentum that we are having" would sustain 23% growth. The report surfaces a structural tension: DTC mix expansion is the engine of margin, but it comes at the expense of wholesale volume. In Q2, DTC grew 34% constant currency, while wholesale grew only 12.7%. The company is deliberately pulling back sell-in to wholesale action in the Americas, where sell-out of "everyday running franchises" lagged in a promotional environment. As co-CEO Caspar Coppetti clarified in Q&A, “So we want to be quite clear. So this is mostly an Americas wholesale topic where it's been a bit more volatile and the months are different.” — Caspar Coppetti, Founder and Co-CEO · 2026-08-11 The trade-off is deliberate: sacrificing near-term wholesale growth to protect full-price integrity and "ensure the best position for launching what we believe are outstanding innovations in 2027" (from Frank Sluis).Rewards of Restraint
The discipline is not new—prior calls repeatedly emphasized "premium strategy" and "discipline." But the execution now shows measurable results. EMEA, which had been "pruned" years ago, grew 20.5% constant currency, with DTC growth exceeding 20% across every subregion. This validates the long-term playbook. As Martin Hoffmann said in March 2026, “The On brand is extremely hot in every part of the world, and I think if we look into 2026, we have clearly the strongest product pipeline in terms of innovation and performance that we ever had.” — Martin Hoffmann, CEO · 2026-03-03 That pipeline is now the fulcrum for reaccelerating growth. The Cloudsurfer 3, the Cloudboom Strike 2, and the scaled LightSpray are poised to redefine the everyday running category. However, the strategy carries risk. By guiding down to "low 20s" growth, On is signaling that the wholesale channel will remain muted through H2, with Q3 likely the trough. Frank Sluis indicated on the call that “we expect the Q3 growth rate to be lower than the Q4 growth rate.” — Frank Sluis, CFO · 2026-08-11 This acceptance of a temporary slowdown underscores a commitment to premium growth over volume. The market's reaction will hinge on whether On can convert its innovation pipeline into wholesale reacceleration in 2027. The company's commitment to "full price" is not a retreat—it's a calculated bet that premium growth will prevail. As Frank Sluis said, "We are on a journey to build the most premium sportswear brand of the coming decades. The discipline inherent in this is what makes this such a compelling earnings model."The company's long-term trajectory remains intact, but the near-term growth has been consciously recalibrated. The "movement class" narrative, the 30% brand awareness, and the athletic achievements provide a foundation, but the market will watch whether the wholesale restraint pays off in 2027. On is betting that patience is a feature, not a bug."We do not create exclusivity through artificial scarcity or hype. We scale by bringing superior technology, engineering, unique design, and cultural relevance to millions of consumers, capturing market share while fiercely protecting our margins." — David Allemann