What's Happening?
On, a Swiss sneaker and running brand, has raised its 2026 profit margin outlook following a successful first quarter, largely attributed to its partnership with actress Zendaya. The collaboration has helped the brand attract younger female consumers,
contributing to a 14.5% increase in net sales, reaching CHF 831.9 million. The company now anticipates its adjusted EBITDA margin to be between 19.5% and 20%, up from the previous forecast of 18.5% to 19%. On aims for at least 23% constant-currency sales growth for the year, targeting annual sales of CHF 3.51 billion. The brand's expansion into apparel and sneakers, bolstered by Zendaya's influence, has shown promising results, with the Cloudtilt sneaker becoming a top seller at Foot Locker Europe. Despite strong growth in the Asia-Pacific region, sales in the Americas have slowed, raising concerns about long-term momentum.
Why It's Important?
The partnership with Zendaya is a strategic move by On to expand its market reach and appeal to a younger demographic, particularly women. This collaboration not only enhances brand visibility but also aligns with current trends where celebrity endorsements significantly influence consumer behavior. The increase in profit margin outlook reflects the effectiveness of this strategy, positioning On for continued growth in the competitive sportswear market. However, the slowdown in the Americas suggests potential challenges in sustaining momentum, highlighting the need for strategic adjustments to maintain growth across all regions.
