Renowned activewear brand On has announced ambitious plans to nearly double its net sales by 2029, amid evolving and challenging market conditions. Following its recent foray into soccer, which executives believe will contribute significantly to growth, On has launched a $1 billion share buyback program and outlined a series of initiatives aimed at achieving its financial goals.
Strategic Growth Initiatives
On aims to expand its net sales to 5.6 billion Swiss francs (approximately $6.8 billion) over the next three years. The company anticipates achieving this with a high-teens growth rate in constant currency, expecting sales to grow in the low-20% range by 2026. Alongside this increasing sales target, the brand plans to maintain a gross profit margin of at least 65% and aims for an adjusted EBITDA margin exceeding 22% by the year 2029.
Diversifying Product Offerings
While On’s growth strategy will heavily rely on running, sneakers, and apparel, the brand is also counting on the success of newer categories such as soccer and golf. Overall, On foresees substantial growth across all product lines through 2029.
Analyst Concerns
Despite On’s projections, some analysts express skepticism about the company’s ability to sustain such robust growth. Analysts at Jefferies, led by Randal Konik, pointed out a slowdown in growth, from 36% to 13% over the past six quarters, and expect only a 3% growth rate from 2026 to 2027, with a 2027 EBITDA margin of 14.8%—short of On’s 2029 target.
Konik added that overcoming this discrepancy necessitates a rapid adjustment, especially in a competitive U.S. market, “without markdowns and paid traffic doing the work.” Needham analyst Tom Nikic also warned against setting overly ambitious targets given the “far more challenging” market environment impacting industry fundamentals and investor confidence.
Innovation and Partnerships
During On’s investor day, executives emphasized their focus on science-based innovation and strategic partnerships with influencers like Zendaya and professional runner Hellen Obiri. The company has also made headlines by signing soccer superstar Kylian Mbappé, breaking away from competitor Nike, to establish credibility in the soccer sector.
Chief Design Officer Thilo Brunner noted excitement around On’s soccer cleats, illustrating the brand’s distinctive design language that resonates with fans. Collaborating with prominent figures like Mbappé and others, the brand is crafting products that are both unique and high-performing. Chief Marketing Officer Alex Griffin also highlighted potential spillover benefits, such as increased visibility for lifestyle product categories as a result of their entry into soccer.
Reporting based on coverage first published by retaildive.com.