Sportswear Brand On Sees Possible Boost From Lower US Tariff Rate

Why It Matters

Reduced tariffs improve On's cost structure, sharpening its competitive edge against Nike and Adidas in the lucrative U.S. market. The upside could accelerate profit growth and fund premium‑brand expansion.

Key Takeaways

• US tariff reduced from 20% to up to 15%.
• Forecast 23% sales growth 2026, profit margin 63%.
• Q4 sales up 22.6% to 743.8 m CHF.
• EBITDA rose 31.8% to 131 m CHF.
• Plans 10‑15 new stores, targeting affluent shoppers.

Pulse Analysis

The U.S. tariff landscape has shifted dramatically for On Holding after the Supreme Court invalidated the emergency duties that previously added a 20% surcharge on imports from key sourcing hubs like Vietnam and Indonesia. The new temporary tariff sits at 10% and may rise to 15%, still well below the prior level. This reduction lowers On's landed cost, creating immediate pricing flexibility and enhancing margins in its largest market, where premium athletic footwear commands strong demand.

Financially, On delivered a robust fourth‑quarter performance, with revenue climbing 22.6% year‑over‑year to 743.8 million Swiss francs and adjusted EBITDA surging 31.8% to 131 million francs. The company projects at least 23% constant‑currency sales growth in 2026 and a profit margin of 63%, outpacing larger rivals Nike and Adidas on a relative basis. The guidance excludes any additional upside from the tariff cut, suggesting that actual results could exceed forecasts if the lower duty becomes permanent.

Strategically, On is leveraging its premium positioning to capture affluent consumers, a segment less price‑sensitive amid a polarized economy. The brand plans to open 10‑15 new stores this year, reinforcing its omnichannel footprint. Moreover, the firm has filed for tariff refunds, pledging to reinvest any recovered funds into product innovation and expansion rather than reducing retail prices. This reinvestment cycle aims to sustain momentum, deepen market penetration, and solidify On's status as a fast‑growing challenger in the global sportswear arena.