On the evening of August 11, Swiss sportswear brand On Holding AG reported its financial results for the second quarter ending June 30, 2026.

The company posted net sales of 850 million Swiss francs, up 13.5% year-on-year, or 21.6% when adjusted for currency effects. This figure fell short of the average analyst estimate of 878 million Swiss francs. Adjusted earnings per share came in at 0.35 Swiss francs, slightly above the market consensus of 0.34 Swiss francs.

Following the earnings release, On Holding AG shares slid as much as 22% during U.S. trading hours.

The revenue miss was primarily driven by pressure in the wholesale channel. In the second quarter, wholesale revenue reached 462 million Swiss francs, up 4.8% year-on-year, or 12.7% on a constant currency basis. This marked a notable deceleration from the 25.1% constant currency growth rate seen in the first quarter.

During the earnings call, On Holding AG noted that sell-through for certain daily running shoe lines was weak, while promotional activity increased in some markets. As a result, the company reduced shipments to distributors to manage channel inventory and maintain full-price selling.

For On Holding AG, this approach helps mitigate the risk of future discounting, but it directly weighed on wholesale revenue in the short term. Wholesale still accounts for 54.3% of the company's revenue, making changes in this channel's growth rate highly impactful on overall performance.

In contrast, the direct-to-consumer (DTC) channel continued to grow.

In the second quarter, DTC revenue reached 388 million Swiss francs, up 26% year-on-year, or 34.3% on a constant currency basis, bringing its share of total revenue to 45.7%.

Both online sales and owned retail stores contributed to the growth. The rising share of DTC not only strengthens the company's control over product pricing and inventory but also serves as a key driver of gross margin improvement.

In the second quarter, On Holding AG gross margin reached 65.4%, up 3.9 percentage points from the same period last year. Adjusted EBITDA was 168 million Swiss francs, up 23.5% year-on-year, with the corresponding margin expanding from 18.2% to 19.8%.

Beyond the higher DTC mix, freight efficiencies and favorable currency movements also positively impacted the gross margin. The company stated these results already factor in the increased costs from U.S. import tariffs, but do not yet account for potential tariff refunds.

The Asia-Pacific region, which includes the Chinese market, remained On Holding AG fastest-growing region. In the second quarter, Asia-Pacific revenue was 171 million Swiss francs, up 43.1% year-on-year, or 54.7% on a constant currency basis, representing about 20% of global revenue.

During the same period, Americas revenue was 452 million Swiss francs, up 13% on a constant currency basis, while revenue from Europe, the Middle East, and Africa reached 228 million Swiss francs, up 20.5% on a constant currency basis.

On the earnings call, the company stated that Japan, South Korea, and Greater China collectively drove growth in Asia-Pacific. Performance across all channels in Greater China exceeded the company's expectations, with particularly strong growth on Tmall. In the second quarter, On Holding AG also opened its first store in Macau. The data indicates that the Chinese market continues to provide incremental volume, but the current disclosure granularity is insufficient to assess the specific scale of this growth or its reliance on new store openings.

The product mix is also shifting. Footwear revenue was 782 million Swiss francs, up 10.9% year-on-year, still accounting for about 92% of total revenue. Apparel revenue grew 47.7% to 54.2 million Swiss francs, and accessories revenue surged 88.3% to 14.5 million Swiss francs. While apparel and accessories posted higher growth rates, their base remains small, and On Holding AG remains highly dependent on footwear.

Following the earnings release, the company revised its 2026 full-year constant currency revenue growth guidance from "at least 23%" to the "low 20% range."

Based on current exchange rates, full-year revenue is now expected to be between 3.47 billion and 3.56 billion Swiss francs, compared to the previous guidance of at least 3.51 billion Swiss francs. At the same time, the full-year gross margin guidance was raised from at least 64.5% to at least 65%, while the adjusted EBITDA margin guidance was maintained at 19.5% to 20%.

On Holding AG is not facing a broad-based demand contraction, but rather a divergence across different markets and channels.

The Asia-Pacific, DTC, and apparel segments are still growing rapidly, and the Chinese market is expanding. However, slower growth in the higher-weight Americas and wholesale channels has dampened overall performance. Boosting the DTC channel mix and reducing promotional activity can support profitability, but with sales expectations lowered, On Holding AG must still demonstrate that its high-margin business model can coexist with long-term scale growth.