On Holding reported record third-quarter net sales of $1.13B (CHF 931.4M), up 17.2% year over year, alongside adjusted EPS of $0.66 (CHF 0.54). That cleared the $0.46 (CHF 0.38) consensus by a wide margin, but the entire gap came from a one-off $64.1M (CHF 52.6M) US tariff refund, booked after a Supreme Court ruling invalidated some of President Donald Trump's levies. Revenue told a quieter story, landing only marginally ahead of analyst forecasts, and direct-to-consumer sales rose 25.0% to $479M (CHF 393.3M).
The margin record comes with an asterisk
Gross margin reached 72.6%, the highest in the Swiss brand's history. Strip out the refund and it is 66.9%, against 65.7% a year earlier. Adjusted EBITDA margin shows the same pattern: the headline 27.6% becomes 21.9% excluding the refund, below the 22.6% posted in the same quarter last year. The quarterly release puts gross profit at $824M (CHF 676.0M), up 29.5%, and net income at $198M (CHF 162.8M), up 36.9%.
On's Record Gross Margin Is Mostly a Tariff Refund
Gross profit margin, %, quarter ended Sept. 30, 2026 vs year earlier
Bar chart. Gross profit margin (%). Q3 2026 Reported: Gross Margin (%) 72.60%. Q3 2026 (ex-tariff): Gross Margin (%) 66.90%. Q3 2025: Gross Margin (%) 65.70%.
Source: On Holding Q3 2026 results, Investing.com
Guidance barely moved where it counts. Full-year net sales growth stays in the low-20% range at constant currency, implying $4.23B to $4.34B (CHF 3.47B to CHF 3.56B), and the adjusted EBITDA margin outlook of 21.0% to 21.5% is unchanged. On did lift its full-year gross margin outlook to around 66% excluding refunds, up from at least 65%.
Growth is cooling by design
Wholesale net sales rose 12.2% to $656M (CHF 538.2M), well behind the 25.0% jump in direct-to-consumer sales. Management is holding back shipments to protect full-price positioning while rivals discount, and On held back digital marketing where markdowns were heaviest, pushing some store openings into the fourth quarter.
The deliberate restraint shows up in the top line. Nine-month constant currency growth of 21.8% cooled to 17.8% in the quarter. Not every analyst bought the headline. Jefferies analysts led by Randal Konik wrote that the quality of the quarter was weaker than it looks, pointing to soft direct-to-consumer figures. On generated about 42% of third-quarter revenue through its own stores and e-commerce, short of the 45% analysts modeled.
The wider slump in the sneaker industry has its own coverage. On's refusal to discount has kept it out of the worst of it. Apparel sales climbed 38.7% to $84.7M (CHF 69.5M), and Asia-Pacific sales rose 31.1% to $231M (CHF 189.9M). Every region posted its highest quarterly sales on record, and net sales crossed $1.10B (CHF 900M) in a quarter for the first time.
For investors, the question is whether high-teens growth is the new baseline for a brand that has grown rapidly since its 2010 founding. The brand's push beyond running shoes has its own coverage. The next real test arrives with holiday trading, when On guided for an acceleration in the fourth quarter without cutting prices.
