Federer-Backed On Surges on Outlook for Its CloudTec Sneakers

(Bloomberg) — On Holding AG rose the most in nearly four months after the Swiss sneaker maker predicted strong demand will continue for its high-priced running shoes that have made it one of the hottest sportswear brands.

The Roger Federer-backed company sees 2025 revenue growing at least 27% in constant currency terms. That would translate to sales of at least 2.94 billion Swiss francs ($3.3 billion) at current exchange rates, On said Tuesday, just shy of analyst estimates. Its fourth-quarter revenue beat expectations.

On’s shares rose as much as 6.7% in early trading in New York, the most on an intraday basis since November, bucking a wider stock slump triggered by fears of a global trade war. They are up about 41% in the past year through Monday’s close, outperforming key rivals including Nike Inc. and Adidas AG.

Analysts pointed to Zurich-based On’s past record of beating its guidance, and both Bloomberg Intelligence and Citi called the latest outlook “conservative.”

The company expects the pace of growth to be higher in the first half of 2025, in part due to new products including the $160 Cloudsurfer 2 running shoe and the more lifestyle-oriented Cloud 6 sneaker, which sells for $150.

Founded in 2010, On has emerged rapidly due to a combination of grassroots marketing and the embrace of high-profile ambassadors including actor and singer Zendaya. Last month, tennis legend Federer appeared in On’s first Super Bowl ad, part of a push to further raise brand awareness and pull in more fans.

The company has capitalized on the struggles of industry stalwarts including Nike, which left an opening for smaller brands when it pulled its sneakers out of many retailers to focus on its own network of stores and online sales.

On is gaining momentum with its own direct-to-consumer sales, which almost doubled in the fourth quarter to 296 million Swiss francs — accounting for almost half of the company’s overall business.

The company’s 2025 growth outlook is slightly ahead of its midterm target of 26% annual growth through 2026, though co-Chief Executive Officer Martin Hoffmann said it’s too early to consider raising that goal. 

“The important message is that the things that will bring us there are working,” he said in an interview. “We can fully focus on the execution of those building blocks, and at the same time we can already focus on setting the brand up for what’s happening after 2026.”

The company’s gross profit margin will probably stay at about 60.5%, in part due to the impact of a stronger dollar, it said.

On sells some of the industry’s most expensive sneakers geared toward running, tennis, training, outdoor sports and everyday comfort.

Beyond footwear, On’s apparel sales topped 100 million francs last year. It plans to expand its offering of athletic shorts, pants, shirts and jackets, and release its first product line created with Zendaya this year, Hoffmann said.

Fourth-quarter sales of 607 million francs was higher than analysts expected, while On’s gross profit margin of 62.1% also beat estimates. Revenue in the period jumped 28% in the Americas, 118% in Asia-Pacific and 31% in Europe, the Middle East and Africa, the company said.

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