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On Holding (ONON -19) is trading sharply lower today following its Q2 earnings report, as a rare top-line miss and a modest reduction to FY26 revenue guidance overshadowed an EPS beat and another quarter of exceptional gross margin. Revenue increased 13.5% yr/yr (+21.6% CC) to CHF850.3 mln, falling short of analyst expectations, while ONON lowered its FY26 revenue growth outlook to the low-20% CC range from at least +23% CC previously. The more encouraging elements were a meaningful acceleration in DTC, continued gross margin expansion, and management's willingness to protect full-price selling rather than chase wholesale volume in a highly promotional marketplace.

• DTC momentum: DTC sales increased 26.0% (+34.3% CC) to CHF388.4 mln, significantly outpacing total company growth as ONON's own stores and online channels continue to gain traction. The strength in DTC is particularly encouraging because it allows ONON to capture more of the retail economics while maintaining tighter control over pricing, merchandising, and the customer experience.
• Wholesale weakness: Wholesale sales increased just 4.8% (+12.7% CC) to CHF461.9 mln, with sellout of several everyday running franchises tracking below ambitions in a highly promotional multi-brand marketplace, particularly in the Americas.
• Margins: Gross margin expanded to an industry-leading 65.4% from 61.5% a year ago, despite ONON fully absorbing higher US import tariffs and excluding any tariff refunds. The improvement reflects the substantially higher DTC mix, operational efficiencies, and disciplined full-price selling, demonstrating that ONON is prioritizing profitable growth over chasing volume through promotions or excess channel inventory.
• Guidance: ONON lowered FY26 revenue growth expectations to the low-20% CC range from at least +23% CC previously, reflecting a more cautious outlook for the second half. However, the company slightly raised its FY26 gross margin outlook to at least 65.0% from at least 64.5% and reaffirmed its adjusted EBITDA margin target of 19.5-20.0%, indicating that management remains confident in the underlying profitability of its premium growth model.
• 2027 innovation runway: Management emphasized that it is approaching 2H26 with discipline and is intentionally avoiding wholesale inventory build-up that could compromise full-price integrity. While that strategy creates a near-term headwind to sales growth, ONON believes it is creating a cleaner runway for upcoming product innovations into 2027 and reinforcing its premium positioning.

Briefing.com Analyst Insight

ONON delivered a disappointing and relatively rare top-line miss, with the weakness concentrated in wholesale and particularly in the Americas. The channel is still larger than DTC, making the slowdown meaningful for consolidated growth, while the reduction to FY26 revenue guidance reinforces that wholesale demand is likely to remain uneven in the near term. That said, the quality of the quarter was better than the headline revenue number suggests. DTC is growing rapidly, gross margin expanded nearly 400 bps despite higher US tariffs, and management is clearly unwilling to sacrifice full-price integrity simply to generate wholesale volume. That discipline should help protect ONON's premium brand positioning and profitability, particularly as DTC becomes a larger portion of the business. The key debate for investors is therefore whether the current wholesale weakness represents a temporary promotional-marketplace issue that ONON can navigate ahead of its 2027 innovation cycle, or whether it signals a broader moderation in the brand's growth trajectory. For now, the sharp stock reaction reflects elevated expectations coming into the report, but the strong DTC trends, industry-leading gross margin, and disciplined inventory strategy provide important offsets to the weaker top-line outlook.