On Holding AG (ONON): PESTLE Analysis [Nov-2025 Updated]

You need to know if On Holding AG (ONON) is running on a clear track or hitting hurdles, and the 2025 data gives us a mixed but mostly bullish view. The company is defintely projecting massive momentum, with full-year net sales forecast to hit at least CHF 2.98 billion, powered by a premium 62.5% gross profit margin and key tech like CloudTec®. But, you still have to map the near-term risks: global trade policy shifts and the constant need for stricter intellectual property (IP) enforcement are real costs, plus currency fluctuations always complicate that strong constant-currency growth. We've broken down the Political, Economic, Sociological, Technological, Legal, and Environmental factors so you can see exactly where the opportunities and the operational tripwires lie.

On Holding AG (ONON) - PESTLE Analysis: Political factors

Global trade policy shifts create planning uncertainty for supply chains.

You're operating in a global trade environment that's defintely more transactional than it was even a few years ago. The shift toward protectionism and bilateral trade deals, especially in the US, creates significant planning uncertainty for On Holding AG's (ONON) supply chain. The company itself acknowledged this in its Q1 2025 results, noting that global trade policy shifts introduce higher levels of planning uncertainty, which includes potential for increased customs and freight expenses.

This uncertainty directly impacts their financial outlook. For the full year 2025, On Holding AG raised its net sales guidance to at least CHF 2.91 billion (Swiss Francs), a constant currency growth of at least 31%, but they simultaneously embedded this higher risk into their profitability targets. They expect a gross profit margin in the range of 60.5%-61.0% and an adjusted EBITDA margin between 17.0%-17.5%. Managing political risk is now a core operational task, not just a macro concern.

Geopolitical volatility is a top-ten global business risk in 2025, impacting international operations.

Geopolitical volatility isn't an abstract risk; it's a tangible cost driver for international operations. Regional instability, cited as a top threat to global trade by the World Economic Forum, directly affects shipping lanes and logistics. The ongoing Red Sea Crisis, for example, caused container vessel volumes through the Suez Canal to decrease by 75% in 2024 compared to 2023, forcing longer, more expensive shipping routes for goods coming from Asia to Europe and the US East Coast.

This volatility forces a focus on supply chain resilience over pure cost efficiency. Here's the quick math: longer routes mean higher freight costs and more working capital tied up in inventory transit (inventory in motion). You have to pay for the shoes before they hit the shelf, so slower shipping hurts cash flow.

• Red Sea Crisis: Container volumes through Suez Canal down 75% (2024 vs. 2023).
• Regional Conflicts: Ukraine-Russia war and Middle East tensions continue to disrupt global logistics.
• Risk Mitigation: Diversification of sourcing is the only real answer.

Tariffs, particularly on goods exported from Vietnam, can affect production costs.

This is the most concrete political risk for On Holding AG. The company is heavily concentrated in Vietnam for manufacturing, which exposes it directly to US trade policy changes. In 2024, On Holding AG sourced a massive 90% of its shoes and 60% of its apparel and accessories from the country.

Effective July 9, 2025, a new US-Vietnam trade deal imposes a 20% tariff on Vietnamese footwear imports, layered on top of the existing average US tariff rate of 13.6% for footwear from Vietnam. This 20% tariff alone is estimated to increase landed costs by $2-$4 per pair for footwear retailers. Plus, a higher 40% levy is applied to transshipped goods (those minimally processed in Vietnam but originating from a third country like China), creating a major compliance and cost risk.

On Holding AG's premium brand positioning gives them some ability to pass these costs to consumers, but the sheer volume of their Vietnamese sourcing makes the tariff impact unavoidable. For context, a competitor like Dr Martens expects a 'high single digit' million-pound impact on full-year profits from US tariffs in 2025.

Swiss origin provides a neutral brand image but doesn't insulate from international trade disputes.

The company is headquartered in Zurich, Switzerland, and its products are engineered in-house there. This Swiss origin lends a premium, neutral, and high-quality engineering image to the brand, which is a powerful marketing asset in a fragmented global market. It's a great shield for brand perception.

But, being Swiss-based does not exempt On Holding AG from the trade policies of its largest markets, especially the US. Since manufacturing is outsourced and heavily concentrated in Vietnam, the company is subject to the US-Vietnam trade relationship, not the US-Switzerland one. The political risk is tied to the location of production, not the location of the headquarters. The operational reality trumps the brand's national origin in this case.

Next step: Operations: Quantify the total expected 2025 tariff cost based on Q2 2025 US sales volume and the 20% rate to stress-test the 60.5% gross margin floor.

On Holding AG (ONON) - PESTLE Analysis: Economic factors

Full-year 2025 net sales are projected to reach at least CHF 2.98 billion, a significant raise from earlier forecasts.

You're seeing strong top-line growth, and On Holding AG's latest guidance confirms the brand's global momentum. The company has raised its full-year 2025 net sales forecast to at least CHF 2.98 billion (Swiss Francs), a significant jump from previous expectations. This translates to a constant currency net sales growth rate of at least 34% year-over-year. This kind of acceleration, even in a volatile market, shows the premium pricing strategy is working, plus the expanded product lines are hitting the mark.

Here's the quick math: The constant currency growth rate (the growth without the effect of currency changes) is higher than the reported growth, which means the underlying demand is even stronger than the reported number suggests. That's a powerful signal to investors.

Gross profit margin is expected to be around 62.5% for the 2025 fiscal year, reflecting premium pricing power.

The expected gross profit margin (GPM) for fiscal year 2025 is around 62.5%. This is a defintely high number for the apparel and footwear industry, and it's a direct result of On Holding AG's premium brand positioning and its direct-to-consumer (DTC) channel strategy. The DTC channel, where the company sells directly to you, the customer, typically carries a much higher margin than the wholesale channel (selling to retailers).

A high GPM like this gives the company a substantial buffer to absorb cost increases, like raw material or freight costs, and still maintain profitability. It's a sign of a strong, inelastic brand. The company continues to see strong demand across its key categories-footwear, apparel, and accessories-with the Asian-Pacific region, for example, nearly doubling its sales in a recent quarter.

Adjusted EBITDA margin is forecast to be above 18.0%, showing improved operational efficiency.

Operational efficiency is improving, with the adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margin forecast to be above 18.0% for the full year 2025. This metric is a cleaner look at core business profitability, stripping out financing and non-cash expenses. Achieving a margin above 18.0% demonstrates disciplined cost control and successful scaling of the business model.

The improved margin is supported by a continued focus on operational excellence and favorable foreign exchange effects in some periods, which helped boost the gross profit margin. This profitability expansion shows the business is maturing past its high-growth, high-investment phase and becoming a more efficient operator. They are managing to grow fast and be profitable.

Here is a summary of the 2025 financial outlook:

Currency fluctuations pose a constant risk, despite strong constant-currency growth.

The biggest near-term risk to these impressive reported numbers is currency fluctuation, especially since the company reports in Swiss Francs (CHF), a historically strong currency. On Holding AG earns a significant portion of its revenue in other currencies, particularly the US Dollar (USD) from the Americas, its largest market.

When key operating currencies, like the USD, materially depreciate against the CHF, it creates a foreign exchange headwind. This means that strong sales growth in the US, when translated back into CHF for the financial statements, is worth less. This is why the constant currency growth rate (at least 34%) is a more accurate measure of the business's health than the reported net sales figure (at least CHF 2.98 billion).

The company must constantly manage this exposure through pricing adjustments and hedging strategies (financial tools to lock in exchange rates).

• Strong CHF erodes non-CHF revenue value.
• Depreciation of key operating currencies against the Swiss Franc is a material risk.
• Reported sales are lower than constant currency sales growth.

Finance: Monitor USD/CHF and EUR/CHF movements daily, and review the currency hedging program by month-end.

On Holding AG (ONON) - PESTLE Analysis: Social factors

You're looking at On Holding AG's explosive growth and wondering if the social tailwinds are strong enough to sustain the premium price point. Honestly, the social factors-from a deep consumer desire for premium quality to a clear shift toward brand-driven ethical consumption-are not just favorable; they are a primary engine for the company's financial momentum. The brand has successfully transitioned from a niche running shoe to a global, lifestyle-driven status symbol.

Strong, sustained demand for premium, high-quality athletic products continues to drive sales.

The market is clearly willing to pay a premium for On Holding AG's products, which speaks volumes about the perceived quality and design. This isn't just about athletic performance anymore; it's about a high-end, differentiated aesthetic. The company's financial results for the 2025 fiscal year underscore this demand, showing that consumer spending is resilient for brands that deliver on both innovation and status.

Here's the quick math: On Holding AG's gross profit margin hit a record 65.7% in the third quarter of 2025. That figure is a massive indicator of pricing power and premium positioning, well above the industry average. For the full year 2025, the company raised its net sales guidance to at least CHF 2.91 billion (Swiss Francs) in reported net sales, reflecting an expected growth of at least 31% on a constant currency basis. That's a serious growth rate that confirms the sustained appetite for their high-quality gear.

Brand successfully appeals to a younger, more fashion-conscious consumer base globally.

The brand is masterfully navigating the intersection of performance sportswear and fashion, which is crucial for capturing the next generation of spenders. We see a significant over-indexing with Gen Z consumers, the cohort that will account for 40% of the US fashion market over the next decade. They want a blend of technical performance and street style, and On Holding AG is delivering.

Brand awareness with the younger 18- to 34-year-old segment is particularly strong, with awareness more than doubling in a single year in the U.S.. This demographic is product-loyal, not always brand-loyal, so the continuous release of culturally relevant products-like the Cloudtilt-is key. This consumer base is highly influenced by social media and cultural relevance, so the company's strategy is defintely working.

Strategic collaborations, like those with Zendaya, broaden brand appeal beyond core running enthusiasts.

The strategic use of cultural icons and high-fashion partnerships is a clear move to cement the brand's position as a lifestyle player, moving past its core of dedicated runners. The multi-year collaboration with actor and fashion icon Zendaya is a perfect example, and it's already generating tangible results. Plus, the partnership with luxury brand LOEWE on the Cloudtilt was a huge success, selling out almost entirely within days.

This focus on apparel and lifestyle-driven footwear is paying off directly in the financials:

The first co-created footwear design with Zendaya, the Cloudzone Moon, launched in Fall/Winter 2025, showing the partnership is moving into product co-creation, which deepens engagement.

Growing consumer preference for brands with clear sustainability commitments enhances loyalty.

Consumers, especially the younger ones, are increasingly using a brand's environmental, social, and governance (ESG) commitments as a filter for their purchasing decisions. While 61% of global consumers care about climate change in 2025, they expect brands to lead with credible proof. On Holding AG is positioning itself to capture this value-driven customer.

The company's focus on circularity and preferred materials is a key differentiator that enhances loyalty, especially since 72% of global consumers are willing to pay more for sustainable products.

• Used 84% of polyester fibers from recycled or renewable resources in 2024, up from 80% in 2023.
• Rolled out the Cyclon subscription program-a circular model for running shoes-to 34 markets.
• Developed CleanCloud technology to turn carbon emissions into shoe foam prototypes.

What this estimate hides is the challenge: despite these efforts, the company's absolute Scope 1 and 2 emissions increased by 13% in 2024 due to rapid expansion. The growth is outpacing the absolute reduction, a common problem for fast-growing companies, but the commitment to preferred materials is a strong positive signal to the market.

Next Step: Product Team: Highlight the 84% recycled polyester figure in all new product marketing copy to directly address the Green Spender consumer segment.

On Holding AG (ONON) - PESTLE Analysis: Technological factors

Core CloudTec® cushioning technology remains the key product differentiator in footwear.

The patented CloudTec® system is the core technology that underpins On Holding AG's premium market position, acting as the primary product differentiator in the fiercely competitive athletic footwear space. This technology, which uses hollow pods (the Clouds) in the midsole to provide cushioned landing and explosive take-off, is not static; it is constantly evolving to meet specialized performance needs. The company's continued success relies on iterating this core innovation, as seen in the launch of the Cloudsurfer 2 and Cloud 6 models in 2025, which feature advanced versions like CloudTec Phase, a system designed to deliver even smoother transitions.

This technological advantage supports the brand's premium pricing strategy, which is a key driver of its high profitability. For the second quarter of 2025 (Q2 2025), the gross profit margin expanded significantly to 61.5%, up from 59.9% in the prior year, a direct reflection of the brand's ability to command a higher price point due to perceived and actual product superiority over legacy competitors. Honestly, the CloudTec system is the technical moat protecting their margins.

Scaling of LightSpray innovation is a focus for advanced manufacturing and product development.

LightSpray™ innovation represents On Holding AG's next-generation technological leap, moving beyond just midsole geometry into advanced manufacturing. This technology is viewed internally as having game-changing potential for long-term sustained efficiency and market share gains. The focus in 2025 is on scaling its production capabilities, which involves significant investment in operational technology and infrastructure.

A concrete action supporting this scale is the completion of the fully automated Atlanta distribution center in early 2025. This automation is a critical technological upgrade that will help manage the next wave of global sales growth, particularly in the crucial North American market. By streamlining the supply chain with advanced logistics technology, the company aims to reduce fulfillment costs and speed up delivery times, supporting its high-growth trajectory, which is projected to be at least 31% net sales growth on a constant currency basis for the full-year 2025, translating to reported net sales of approximately CHF 2.91 billion.

Direct-to-Consumer (DTC) channel success relies heavily on continuous investment in digital and tech capabilities.

The Direct-to-Consumer (DTC) channel is the company's most profitable sales engine, and its growth is deeply intertwined with digital technology investment. The DTC channel's success is fueled by continuous tech enhancements, including AI-driven personalization and a sophisticated global e-commerce network that spans 28 countries. This digital focus ensures a premium, high-margin customer experience.

The financial impact of this digital strategy is clear. DTC sales growth in Q2 2025 surged by 47.2% on a reported basis (or 54.3% on a constant currency basis), significantly outpacing the wholesale channel. This growth has increased the DTC channel's contribution to overall revenue, which is a key profitability lever. To be fair, this DTC dominance insulates the brand from some retail volatility.

Innovation is expanding into new categories like tennis and training sneakers.

On Holding AG is strategically leveraging its core CloudTec technology to expand into new, high-growth categories beyond running, specifically tennis and training. This product diversification is a technological strategy to broaden the total addressable market and reduce reliance on the core running segment. The technology is adapted for the lateral stability and court-specific demands of tennis and the multi-directional movement of training.

The technological spillover effect is evident in the explosive growth of non-footwear categories, which benefit from the brand equity built on performance technology. Apparel and accessories, which rely on technical fabric innovation and design, saw phenomenal growth in the first quarter of 2025:

• Apparel sales surged by 93% in Q1 2025.
• Accessories revenue jumped by 99% in Q1 2025.

This expansion into a full ecosystem of premium activewear, including the technical demands of tennis and training shoes, shows that the company's innovation pipeline is defintely robust and scalable across different athletic disciplines.

On Holding AG (ONON) - PESTLE Analysis: Legal factors

You're looking at On Holding AG's phenomenal growth-projected net sales of at least CHF 2.86 billion for 2025-and the immediate question is how to protect that value from legal and regulatory risks. The legal landscape for a premium, global sportswear brand is a minefield of intellectual property (IP) battles, complex international labor laws, and shifting trade tariffs. Navigating this requires more than just compliance; it demands proactive risk mitigation to safeguard the brand's premium positioning and profitability.

Increased threat of counterfeit products necessitates stricter intellectual property (IP) enforcement globally.

Protecting the distinctive CloudTec® sole design and the On brand name is a constant, expensive fight. Counterfeiting is a major threat to a premium brand like On Holding AG, especially as sales expand into over 80 countries. While specific 2025 legal spend isn't public, the cost of global IP enforcement-investigations, cease-and-desist actions, and litigation-is a material drag on operating expenses.

Honesty, if you're not actively fighting fakes, you're losing margin and brand equity. The industry trend shows this is a high-stakes game: a competitor, Birkenstock, secured an ex parte injunction in the Delhi High Court in March 2025 against large-scale counterfeit footwear manufacturing in India, demonstrating the necessary, aggressive nature of this defense in key Asian markets. This is the playbook On Holding AG must follow to protect its forecast gross profit margin of 60.0% to 60.5% for full-year 2025.

Compliance with diverse international labor and manufacturing regulations is required across the supply chain.

The global supply chain, where substantially all of On Holding AG's products are manufactured by independent contract suppliers, is subject to intense scrutiny. This risk is compounded by a patchwork of international laws aimed at eliminating forced labor and ensuring ethical sourcing. The company's compliance efforts must span multiple jurisdictions, creating a significant administrative and due diligence burden.

The core compliance requirements for a global apparel and footwear company as of 2025 include:

• Mandatory reporting under the UK Modern Slavery Act.
• Adherence to the California Transparency in Supply Chains Act.
• Compliance with Canada's Fighting Against Forced Labour and Child Labour in Supply Chains Act.

The most critical risk is the U.S. Uyghur Forced Labor Prevention Act (UFLPA), which establishes a rebuttable presumption that goods from the Xinjiang Uyghur Autonomous Region (XUAR) are made with forced labor and are banned from entry into the U.S. The U.S. Customs and Border Protection (CBP) has detained over 12,500 shipments valued at $3.68 billion since June 2022, with apparel/textiles being one of the four most heavily impacted commercial industries. This means On Holding AG must maintain a meticulous, auditable supply chain that proves non-involvement with any of the 144 entities added to the UFLPA Entity List as of 2025, or risk significant import delays and seizures in its largest market, the Americas, which accounted for CHF 385.1 million in net sales in Q4 2024 alone.

Trade agreements and import/export laws, especially concerning raw materials and finished goods, create regulatory complexity.

Geopolitical tensions and trade policy shifts directly impact the cost of goods sold (COGS). On Holding AG acknowledged in its Q1 2025 report that recent global trade policy shifts have introduced a 'higher degree of uncertainty' into its planning. The most persistent complexity comes from U.S. trade policy.

The ongoing Section 301 tariffs on Chinese-origin goods remain a material factor, applying rates of 7.5% or 25% depending on the product classification. While the company may have diversified its manufacturing base, a reliance on Chinese raw materials or Tier 2 suppliers means these tariffs are still an indirect cost risk. The potential for new reciprocal tariffs in 2025 across key industries further complicates logistics and pricing strategy.

Corporate governance and SEC filing requirements must be maintained as a NYSE-listed company.

As a Foreign Private Issuer (FPI) listed on the New York Stock Exchange (NYSE), On Holding AG is subject to the U.S. Securities and Exchange Commission (SEC) reporting regime, specifically the annual Form 20-F. This adds a layer of complexity beyond Swiss corporate law.

The 2025 reporting cycle introduced new requirements that demand immediate attention. For the 2024 fiscal year Form 20-F filed in 2025, the company was required to file its insider trading policy as a new exhibit (Item 16J), and disclose whether it has a compliant clawback policy. Plus, the SEC is increasingly scrutinizing disclosures related to cybersecurity, artificial intelligence (AI) risk, and human capital management, requiring constant updates to the risk factors section of the Form 20-F. The dual-class share structure, with Class B voting rights shares concentrating control with the extended founder team, is also a corporate governance feature that requires clear, continuous disclosure to maintain investor confidence.

On Holding AG (ONON) - PESTLE Analysis: Environmental factors

You need to know that On Holding AG's environmental strategy is a critical competitive factor, not just a compliance issue. The company's core business pillar is a strong commitment to circularity and using renewable materials, but their rapid growth is still creating near-term carbon challenges. This is a classic decoupling problem where innovation is fighting scale.

Strong commitment to circularity and using renewable materials is a core business pillar.

On Holding AG is defintely pushing a bold vision: a future where every product is fossil-free and fully circular. This isn't just marketing; it's the company's stated North Star, driving their material innovation and business model design. They are actively working to keep materials in flow, which means designing products for their next life from the start. This focus is a major strategic advantage in a market increasingly scrutinized for textile waste.

The circularity model extends beyond just recycled content to include take-back programs and product-as-a-service initiatives like the Cyclon™ subscription. For example, the Cloudneo shoe is designed to be fully recyclable into a new product, moving away from the traditional linear take-make-dispose model.

The company is actively working to decouple growth from resource use and reduce its environmental impact.

The challenge for a company growing as fast as On Holding AG is separating business expansion from its carbon footprint. The 2024 Impact Progress Report, released in April 2025, shows this tension clearly. While they are improving efficiency, absolute emissions are still rising due to massive production volume increases. Still, they are making progress in efficiency.

Here's the quick math on their recent emissions performance:

To be fair, their long-term goals are aggressive and science-backed, aiming for a 46% absolute reduction in Scope 1 and 2 emissions and a 55% economic intensity reduction in Scope 3 emissions by 2030, all against a 2019 baseline. Starting in 2025, they are introducing product-level carbon reduction targets to embed these goals directly into the design process.

Development of the Cloudprime shoe, made from carbon emissions, showcases material innovation.

The Cloudprime shoe is the poster child for On Holding AG's material innovation, using captured carbon emissions as a raw material source. This is a major step toward de-fossilizing the supply chain, which is crucial since materials and manufacturing account for most of their emissions.

The innovation, called CleanCloud™, is a performance ethylene vinyl acetate (EVA) foam used in the midsole. The prototype's CleanCloud™ foam is made with 51% CO2. They are working with a coalition of partners to bring this to scale, moving the material from a prototype to an in-line product as fast as possible.

Key material innovations in the Cloudprime prototype include:

• Midsole: CleanCloud™ EVA foam, made using carbon emissions captured by LanzaTech.
• Outsole: Chemically upcycled Thermoplastic Polyurethane (TPU) from post-consumer plastic waste, in partnership with Novoloop.
• Upper: A polyester-based textile derived from carbon emissions, developed with Fairbrics.

Focus on increasing the use of recycled materials, with recycled polyester usage already at 85% in 2021.

The company has significantly scaled up its use of Preferred Materials, which are materials sourced to use less water, fewer harmful chemicals, and lower carbon emissions. This is where the rubber meets the road on their environmental commitments. The progress is measurable and consistent across key material types, showing a clear shift away from virgin, fossil-based inputs.

Look at the material composition data from the 2024 Impact Progress Report:

• Polyester Fibers: 84% sourced from recycled or renewable resources in 2024, up from 80% in 2023.
• Polyamide Fibers: 92% used in apparel and accessories came from recycled or renewable sources in 2024.
• Cotton and Cellulosics: 80% in apparel and accessories came from preferred sources in 2024.

This high percentage of recycled polyester, 84% in 2024, is well above the industry-wide goal of 45% for the 2025 Recycled Polyester Challenge, positioning On Holding AG as a leader in material uptake. This is a strong signal to investors and consumers that the company is executing on its material innovation pillar.