> ## Content Index > Fetch the complete content index at: https://brief.sharpertrades.com/llms.txt > Use this file to discover other available public pages before exploring further. # On Holding Shares Slide as Tariff Refunds Cloud Strong Earnings - URL: https://brief.sharpertrades.com/on-holding-shares-slide-as-tariff-refunds-cloud-strong-earnings/ - Published: 2026-11-10T15:43:16.000Z - Updated: 2026-11-10T15:43:16.000Z - Description: On Holding shares fell nearly 8% despite record quarterly sales and stronger gross margins. A one-time tariff refund boosted earnings, while unchanged revenue and underlying profit guidance tempered investor enthusiasm. - Author: Luca Moschini - Tags: Earnings, Business Trends, Price Action ### Strong Sales Meet More Cautious Profit Expectations On Holding (ONON) shares declined nearly 8% Tuesday after the Swiss premium sportswear company reported record third-quarter revenue and raised its full-year gross margin outlook. Despite strong consumer demand and an earnings beat, investors focused on the contribution of U.S. tariff refunds to reported profitability and the company's unchanged sales guidance. The results highlighted a contrast in On's performance: its premium pricing strategy and direct-to-consumer business continue to deliver growth, but higher operating expenses are absorbing some of those gains. The distinction between reported earnings and underlying profitability became a central factor in the stock's negative reaction. --- ### Key Points - Earnings quality: On's quarterly profit exceeded expectations, but a one-time U.S. tariff refund contributed significantly to reported margins and earnings. - Consumer demand: Revenue grew 17.2%, supported by strong direct-to-consumer sales, Asia-Pacific expansion, and continued demand for premium footwear and apparel. - Outlook unchanged: Management raised its underlying gross margin forecast but maintained its full-year revenue growth and adjusted operating profitability targets. --- ## Tariff Refunds Boost Earnings but Obscure Underlying Margins On reported third-quarter revenue of CHF 931.4 million, representing 17.2% growth from the prior year and broadly matching analyst expectations. Adjusted earnings per share reached CHF 0.54, exceeding the FactSet consensus estimate of CHF 0.39, and net income also increased substantially from a year earlier. However, the earnings beat included a significant contribution from U.S. tariff refunds. On recognized CHF 52.6 million in tariff refunds during the quarter, lifting its reported gross margin to a record 72.6%. Excluding that benefit, gross margin was 66.9%. The distinction matters because tariff refunds are not the same as recurring improvements in pricing, production efficiency, or operating performance. Even without the refunds, On's gross margin improved from the previous year, supported by premium pricing, favorable sales mix, and operating efficiencies. Yet that improvement did not fully translate into stronger underlying operating profitability. Adjusted EBITDA, a measure of earnings before interest, taxes, depreciation, and amortization, reached CHF 256.8 million. Excluding tariff refunds, the corresponding margin was approximately 21.9%, compared with the prior year's reported 22.6%. Higher spending on retail expansion, personnel, distribution, and technology contributed to the difference. This helps explain why investors reacted negatively despite the headline earnings beat. The reported figures demonstrated strong profitability, but the underlying results showed that business investment continued to absorb part of the company's margin gains. ## Why Is On Holding Growing Despite a Promotional Footwear Market? On's operating performance demonstrated continued demand for its premium products, even as the broader footwear market remained highly promotional. Direct-to-consumer sales increased 25%, outpacing wholesale growth of 12.2%, and the company's own retail stores and digital channels now account for more than 42% of total revenue. This shift supports On's strategy of maintaining closer relationships with customers while preserving its premium positioning. Management emphasized that the company continued selling products at full price rather than relying on widespread discounting, and Founder and Co-CEO Caspar Coppetti attributed the quarter's performance to product innovation, athlete partnerships, and premium customer experiences. Growth was also geographically broad, although regional performance varied. Asia-Pacific led with sales growth of 31.1%, followed by Europe, the Middle East, and Africa at 17.9%. The Americas grew 12.4%, reflecting a more moderate pace in On's largest regional market. The company's product mix also continues to evolve. Footwear remains the dominant business, supported by the Cloudsurfer 3 performance-running shoe and Cloudtilt lifestyle franchise. Meanwhile, apparel sales increased 38.7%, helped by the latest Zendaya collection. Although apparel remains a relatively small portion of total revenue, management has identified it as an important long-term growth opportunity. On is also expanding beyond running into additional sports categories, including soccer and a planned golf launch. The results suggest that differentiated products and premium positioning continue to attract consumers, even as other sportswear brands face pressure from discounting. ## Unchanged Guidance Shifts Attention to Holiday Sales Despite the record quarter, On maintained its full-year 2026 revenue growth outlook in the low-20% range on a constant-currency basis. That forecast implies annual sales of approximately CHF 3.47 billion to CHF 3.56 billion at current exchange rates. Management expects fourth-quarter revenue growth to accelerate, supported by holiday campaigns, product launches, and continued expansion across its growth categories. However, the company has also been selective about shipments to wholesale partners, particularly in the Americas, to protect its premium positioning. That approach supports pricing discipline but can moderate near-term wholesale revenue growth. On did raise its underlying full-year gross margin outlook to approximately 66%, compared with its previous expectation of at least 65%. Including tariff refunds, the company expects a gross margin of approximately 67.5%. Its underlying adjusted EBITDA margin outlook, however, remained unchanged at 19.5% to 20%. This reinforces the central issue in the earnings reaction: stronger product margins have not yet translated into a corresponding increase in expected operating profitability. Management continues investing in stores, technology, distribution, and product development, all of which contribute to operating expenses. --- ## What It Means for Investors On's third-quarter results present a mixed picture of strong brand execution and more restrained underlying profitability. The company's ability to maintain full-price selling in a promotional market is an important competitive distinction, and growth in direct-to-consumer sales and apparel shows that its expansion is not limited to traditional running footwear. However, the market reaction highlights the importance of separating recurring business performance from one-time financial benefits. Tariff refunds improved reported earnings and gross margins, but excluding them provides a clearer view of operating trends. Investors also have reason to distinguish between growth across the business and growth in its largest markets, as Asia-Pacific remains particularly strong while the Americas are expanding at a more moderate pace. The next meaningful indicators will be fourth-quarter sales acceleration, continued full-price demand, and the extent to which stronger gross margins translate into underlying operating profitability. ## Conclusion On Holding delivered record third-quarter sales, strong direct-to-consumer growth, and improving underlying gross margins. Yet its stock declined sharply because the earnings beat benefited from tariff refunds while full-year revenue and underlying operating margin guidance remained unchanged. The results underscore the difference between a company growing successfully and one exceeding investors' expectations for profitability. For On, the coming holiday quarter will test whether its premium strategy can sustain momentum while supporting the investments needed for its next phase of expansion. --- ## FAQs ### Why did On Holding stock fall after its third-quarter earnings? On Holding shares fell nearly 8% despite strong sales and an earnings beat. Investors focused on the contribution of one-time U.S. tariff refunds to reported profits, unchanged revenue guidance, and operating expenses that limited underlying margin improvement. ### How did tariff refunds affect On Holding's earnings? On recognized CHF 52.6 million in U.S. tariff refunds during the third quarter. These refunds increased reported gross margin to 72.6%, compared with 66.9% excluding the benefit, and also contributed to adjusted earnings. ### Is On Holding still growing its sales? Yes. Third-quarter revenue increased 17.2% year-over-year, supported by 25% growth in direct-to-consumer sales, strong Asia-Pacific performance, and expanding apparel revenue. ### Did On Holding raise its full-year guidance? On raised its underlying gross margin outlook to approximately 66%, excluding tariff refunds, from at least 65% previously. It maintained its full-year constant-currency revenue growth outlook in the low-20% range and left its underlying adjusted EBITDA margin forecast unchanged. ### What matters most for On Holding in the fourth quarter? Management expects sales growth to accelerate during the holiday quarter. Key factors include continued full-price selling, new product launches, wholesale shipment discipline, and whether improving gross margins translate into stronger underlying operating profitability. *This article was created with AI assistance and reviewed by an editor. 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