ON’s Premium Playbook Is Working
Fourth Quarter of FY 2024 Earnings Call
If you're building a long-term position in consumer brands, you'd be wise to take a close look at On.
The Swiss running company has made its ambitions clear: become the most premium global sportswear brand. And based on what we just saw in Q4 2024, they’re not just chasing that goal—they’re sprinting toward it with confidence.
Let’s talk numbers first. Net sales were up 33% in constant currency to CHF 2.32 billion. That’s not just strong—it's exceptional. This growth isn't coming at the expense of profitability either. Gross margins hit 60.6%, and adjusted EBITDA margin came in at 16.7%. That’s premium pricing power in action.
D2C Power = Premium Margins
The brand continues to expand its direct-to-consumer channel, increasing its share by more than 3 percentage points. This isn’t just about higher margins (though it helps)—it’s about controlling the customer experience end-to-end. That “superpower” to connect directly with fans gives On a level of control and loyalty most brands would kill for.
The Brand is Everywhere—and People Are Talking
Paris last summer? On was one of the most talked-about brands. That buzz translated into something real: Footwear News named it Brand of the Year.
And if you're betting on long-term brand equity, look at Gen Z. Awareness in the U.S. more than doubled in a single year, with On becoming one of the most wanted sports shoe brands among teens. That’s not just a trend—it’s future-proofing.
A Playbook Built for Decades
On doesn’t just think in quarters—they’re thinking in decades. They’ve broken down their brand strategy into three simple pillars:
Premium product offerings
Strategic partnerships
Impactful global market presence
Two key priorities are driving international expansion:
Live sports moments – visibility in places that matter.
Premium retail stores – creating aspirational physical touchpoints.
If you're a fan of Phil Fisher’s “scuttlebutt” investing philosophy, this is what you want to see—a company building long-term mindshare through product, performance, and presence.
The 35-and-Under Advantage
On is clearly winning with the next generation of consumers. The share of products sold to customers aged 35 and younger increased 6–8 percentage points across its top 3 franchises: Cloudmonster, Cloudsurfer, and Cloudrunner—all of which grew between 60% and 140% in 2024. These aren't just products—they're movements.
Wholesale Channels Validate the Momentum
Selective expansion through key wholesale partners like Dick’s, JD, and Foot Locker has led to broader shelf space and stronger market share. Even as D2C gains share, wholesale sell-through remains robust. The message is clear: this brand is hot—and it's selling everywhere.
Financial Strength = Optionality
Let’s not ignore the financials. Net working capital as a % of net sales improved from 27.7% to 21.5%. That kind of operational discipline speaks to the culture On is building—one where innovation meets execution.
The Bottom Line
This isn’t just a premium running brand—it’s a premium business. On is showing that you can grow fast, stay profitable, and build a brand that resonates with the next generation of consumers. The flywheel of product, brand, and channel is spinning faster—and the long-term setup looks stronger than ever.
They’re not just building a brand for now. They’re building one for the next 15 years.