On Holding Beat Profit Forecasts as Gross Margin Hit a Record 72.6%

On Holding reported adjusted diluted earnings of 0.54 Swiss francs a share for the third quarter on Tuesday, well above the 0.39 francs analysts polled by FactSet expected.

On Holding AG, the Swiss sportswear company listed in New York as ONON, reported the results on Tuesday, November 10, 2026. The quarter ran to September 30, 2026.

Net sales rose 17.2 percent to 931.4 million Swiss francs. On a constant currency basis - growth measured without currency swings - sales rose 17.8 percent.

It was the first quarter above 900 million francs in On's history. Every channel, region and product category contributed, the company said.

Sales just cleared the 929.3 million francs analysts expected, according to LSEG data compiled by Reuters. The profit beat was far larger than the sales beat.

A record margin with a one-time refund inside it

Gross profit rose 29.5 percent to 676.0 million francs. Gross profit margin - gross profit as a share of sales - reached 72.6 percent, from 65.7 percent a year earlier.

That margin includes 52.6 million francs of U.S. tariff refunds received in the quarter. The refunds alone equal about 5.6 percent of net sales, a TickerGrove calculation.

Excluding the refunds, the margin was 66.9 percent, the company said. Even that lower figure was a record, its finance chief said.

Chief Financial Officer Frank Sluis credited full-price demand, own-channel sales and scale. He put it this way: "premium is not the adjective in our financial model - it is the mechanism."

Adjusted for the refunds and a one-time freight benefit a year earlier, the margin rose about 320 basis points year over year. A basis point is one-hundredth of a percentage point.

For the first nine months, gross margin was 67.6 percent. That compared with 62.5 percent in the same period a year earlier.

Profit rose well beyond the sales gain

Net income rose 36.9 percent to 162.8 million francs. The net income margin reached 17.5 percent, from 15.0 percent a year earlier.

Adjusted net income rose 26.7 percent to 180.1 million francs. Adjusted net income is a non-IFRS measure - it excludes share-based compensation from the reported result.

Adjusted EBITDA rose 42.7 percent to 256.8 million francs. Adjusted EBITDA is earnings before interest, taxes, depreciation and amortization, on the company's adjusted basis.

The adjusted EBITDA margin was 27.6 percent, or 21.9 percent excluding the tariff refunds. Reported diluted earnings were 0.48 francs a Class A share, up from 0.36 francs.

Cash and cash equivalents stood at 1.34 billion francs at September 30. That was up 31.3 percent from the end of 2025.

Direct sales grew fastest, but missed what analysts expected

Direct-to-consumer sales rose 25.0 percent to 393.3 million francs. The channel - On's own stores and website - reached 42.2 percent of net sales.

Analysts had expected 419.3 million francs from the channel, the Wall Street Journal reported. Direct sales therefore missed expectations even while growing fastest.

"We always set an extremely high bar for ourselves, and this quarter we landed slightly below it," Sluis said. He was referring to the direct-to-consumer performance, on a call with analysts.

Sluis said softer online traffic held direct sales back, the Journal reported. He also cited the timing of certain new store openings.

Wholesale sales rose 12.2 percent to 538.2 million francs through partner retailers. That was higher than analysts anticipated, the Journal reported.

Wholesale was helped when key Americas accounts pulled holiday deliveries into late September. The deliveries had been planned for October, the Journal reported.

The Americas remained the largest region at 490.1 million francs, up 12.4 percent. Europe, the Middle East and Africa rose 17.9 percent to 251.4 million francs.

Asia-Pacific rose 31.1 percent to 189.9 million francs, the fastest regional growth. Each region posted its highest quarterly sales yet, the company said.

Shoes still dominate, at 843.7 million francs, up 15.4 percent. Apparel rose 38.7 percent to 69.5 million francs, and accessories rose 39.2 percent to 18.1 million francs.

The full-year sales outlook held, and the margin outlook rose

On reiterated full-year net sales growth in the low-20 percent range on a constant currency basis. At current spot rates, that implies 3.47 billion to 3.56 billion francs of sales.

The company said it plans for sales growth to accelerate in the fourth quarter. It pledged to keep full-price discipline through the holiday season.

Full-year gross margin is now expected around 67.5 percent including the refunds. Excluding them, it is expected around 66 percent, up from at least 65 percent before.

The adjusted EBITDA margin outlook was left unchanged. On expects 21.0 to 21.5 percent including refunds, or 19.5 to 20.0 percent excluding them.

The outlook now counts the refunds, which the previous outlook did not. That is why the company shows both versions of each margin guide.

Shares fell after the open despite the beat

Shares fell 6.7 percent to $35.01 shortly after the opening bell on Tuesday, the Wall Street Journal reported. Counting Tuesday's fall, the stock had lost more than a quarter of its value this year.

The drop suggests investors weighed the direct-sales miss heavily. The refund inside the margin gave them a second reason to discount the headline.

What remains unknown

What remains unknown starts with the holiday quarter. On has promised faster sales growth in the fourth quarter, but it has not yet delivered it.

Whether direct-to-consumer traffic recovers is also unknown. Softer online traffic and store timing explained the third-quarter shortfall, on management's account.

The repeatable margin is a third unknown. The refund-free margin was a record, but the promotional market testing full-price discipline is still running.

The holiday quarter will test the premium model

What to watch: fourth-quarter sales growth against the promised acceleration. Direct-to-consumer sales against the bar management set for itself will matter most.

Watch also whether the full-year margin lands near 66 percent without the refunds. That figure, not the refund-flattered headline, is the comparable test.