EXCLUSIVE: Swiss Sneaker Maker On Stays Bullish On Middle East Expansion Despite Iran Tensions — Says US Tariff Relief Could Boost Margins

• Roger Federer-backed On Holding on Tuesday forecast that gross margin will reach at least 63% in fiscal 2026, up from 62.8% in 2025.
• On’s quarterly adjusted earnings per share came in at CHF 0.25, compared to estimates of CHF 0.21.
• The company expects fiscal 2026 net sales to grow by at least 23% year-over-year on a constant currency basis.

On Holding AG CEO Martin Hoffmann said that the Swiss sportswear maker’s expansion in the Middle East remains on track, even amid the ongoing crisis triggered by recent U.S. and Israel military action in Iran. 

“Well, it (expansion) will clearly happen all around the world. Probably a region that we'll see more of is Latin America, where we don't have so many yet. The Middle East, of course, is an area … but clearly it is on the radar,” Hoffmann said in an exclusive interview with Stocktwits. The company, backed by tennis legend Roger Federer, recently opened its latest store in Kuwait in January, marking its second retail outlet in the Gulf region.

Middle East Expansion On The Horizon

Hoffmann said that business-wise, the region is relatively small for the company. “It's very much at the beginning of the expansion. We are working with distributor partners in almost every one of these markets,” he said.

“It is clearly a region where we see a lot of business opportunity, but I think peace and safety come first and then comes business,” Hoffmann noted, addressing the current conflict in the Middle East following the U.S. and Israel attacking Iran during the weekend.

He added that so far, the supply chain has proved very resilient despite a volatile geopolitical environment, and noted that the conflict in the Middle East has not had a major impact on it because most of it goes in different directions.

“But we know from the past that there are always ripple effects down the road that we need to consider, but at the moment, you see this in the quality of our inventory and our working capital. I think the operations run extremely smoothly,” Hoffmann said.

Tariffs Relief On The Horizon Now?

On Tuesday, On said it expects gross margin to reach at least 63% in fiscal 2026, up from 62.8% in 2025. “This outlook is still basically made on the assumption of the world that we had pre-Supreme Court ruling. So it’s still assuming that 20% incremental tariff,” Hoffmann said.

He added that any easing in tariffs or potential refunds would create further upside. “There’s additional opportunity, or even more profitability, especially more reinvestment into some of the dreams that we have,” Hoffmann said.

Last week, global tariffs introduced by U.S. President Donald Trump took effect at a reduced 10% rate after the Supreme Court of the United States blocked the broader measures.  “But really, inside the brain, we are not talking much about tariffs,” Hoffmann said.

Full Price Sales Booming

The company’s fourth-quarter net sales rose by 22.6% to CHF 743.8 million ($949.13 billion), beating Wall Street expectations of CHF 727.02 million, according to data from Stocktwits. On’s quarterly adjusted earnings per share came in at CHF 0.25, compared to estimates of CHF 0.21.

“I think the full price sharing in the fourth quarter was the highest that we ever had. Despite growing that, or just being fully focused on full price, we achieved great growth results,” Hoffmann said.

“And it shows if you have innovation in your products, if you have excitement in your products, then you earn the pricing power out of it,” he added. The company expects fiscal 2026 net sales to grow by at least 23% year-over-year on a constant currency basis.

On said that it implies reported net sales of at least CHF 3.44 billion, compared with estimates of CHF 3.67 billion.

Scaling Light Spray Production

In 2024, On launched the "LightSpray" production method, in which a robotic arm sprays material onto a mould to create a sock-like upper base for a marathon shoe with no laces. This method is currently used in Zurich, and Hoffmann said that the company has opened the second LightSpray factory in Korea. 

“We really opened the factory of 30 robots, which means we basically have 32 times the capacity of what we had before, and this is the base now for really scaling LightSpray commercially, and it will come into the market as the LightSpray Cloudmonster 3 Hyper, the first product for the everyday runner,” he said.

What Is Retail Thinking?

Retail sentiment on On Holding jumped to ‘extremely bullish’ from bullish’ a day ago, with message volumes at ‘high’ levels, according to data from Stocktwits.

Wall Street has an average ‘Strong Buy’ rating, according to Koyfin, with 23 out of 28 analysts rating ONON ‘Buy’ or higher, four ‘Hold’, and one rating it ‘Sell.’ The average price target on the stock is $62.12, implying a 33% upside to the last closing price.

On’s forward price-to-earnings (P/E) ratio is currently at 29.6x versus Nike’s 32.3x and Adidas’ 15.9x. Shares of On Holding have declined nearly 4% in the last 12 months compared to the Consumer Discretionary Select Sector SPDR Fund’s 7.8% gain. But that has been better than Nike’s 22% slump during the same period.

(CHF 1 = $1.28)

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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