On Holding’s second-quarter results delivered a sharp reminder that fast growth is not always enough when a stock is priced for even faster growth. The Swiss sportswear company reported net sales of 850.3 million Swiss francs, up 13.5% from a year earlier and 21.6% in constant currencies. Yet the shares fell 20.3% in New York on Tuesday after the company lowered its full-year sales outlook and offered a revenue forecast that disappointed investors.
The quarter was not weak in every respect. On’s gross margin reached 65.4%, up from 61.5% a year earlier, showing that the company retained considerable pricing power despite higher U.S. tariffs and a competitive athletic-footwear market. Adjusted EBITDA was 168.1 million francs, equivalent to a margin of nearly 20%. Adjusted earnings per share also came in ahead of analyst expectations, according to market reporting.
Those figures make the selloff look less like a verdict on current profitability than a reassessment of the growth assumptions embedded in the shares. On has spent years building a premium brand around technical running products, selective distribution and limited discounting. That model can produce attractive margins, but it also leaves little room for revenue disappointments because investors expect the company to keep gaining share without relying on promotions.
Management now expects constant-currency net sales to grow in the low-20% range in 2026. That is below its previous forecast of at least 23%. The change is not a collapse in demand, but it matters because it resets the near-term growth bar just as comparisons become more demanding. In last year’s second quarter, sales rose 32.0% on a reported basis and 38.2% in constant currencies. Maintaining anything close to that pace becomes harder as the revenue base expands.
Currency also complicates the picture. The gap between reported growth of 13.5% and constant-currency growth of 21.6% shows that exchange rates absorbed a meaningful portion of the company’s underlying expansion. Investors should separate that translation effect from operating performance. At the same time, foreign exchange cannot fully explain the reaction because the company’s revised outlook is itself stated in constant currencies.
The more important question is whether On can preserve its premium positioning while restoring enough volume growth to satisfy the market. The company has said it does not intend to cut prices simply to generate sales. That discipline supports brand value and gross margin, but it also shifts the burden onto product innovation, store productivity, wholesale execution and customer acquisition. If new products or regional demand fail to accelerate, protecting price may come at the cost of slower unit growth.
There is a genuine positive signal in the margin performance. A 390-basis-point year-over-year increase in gross margin suggests that On is not buying growth through heavier promotions. The company also maintained its adjusted EBITDA margin outlook of 19.5% to 20.0% and raised its full-year gross-margin expectation to at least 65%. That combination indicates that the earnings model remains intact even as the top-line forecast softens.
But the market’s response highlights a broader risk for premium consumer companies. Strong margins can support valuation only while investors believe they are paired with durable, above-market growth. Once guidance comes down, even modestly, the same pricing discipline that once looked like strength can be questioned as a possible constraint on demand.
For On, the next few quarters will need to show that this reset is temporary rather than the start of a more normal growth phase. Investors will be watching whether constant-currency sales reaccelerate, whether full-price selling remains healthy and whether the company can hold its margin gains without sacrificing reach. The second quarter did not break On’s premium model, but it raised the standard of proof for the growth that model is supposed to deliver.