ONON (ONON) Q1 2025: Asia-Pacific Sales Surge 130% as Premium Brand Strategy Drives Global Outperformance
ONON’s Q1 2025 saw a step-change in global reach, led by a 130% surge in Asia-Pacific sales and record direct-to-consumer (D2C) momentum, as the company’s premium brand and innovation strategy delivered margin expansion despite currency and tariff headwinds. Leadership transition, automation investments, and a disciplined omnichannel rollout set the stage for continued outperformance, but execution on pricing power and supply chain resilience will determine if ONON can sustain its pace in a volatile global environment.
Summary
- Asia-Pacific Expansion Accelerates: Triple-digit growth in the region signals successful localization and brand resonance.
- Premiumization Fuels Margin Gains: Price increases and D2C mix lift profitability despite FX and tariff pressures.
- Brand Investments Drive Global Demand: Campaigns and new product launches unlock new audiences and reinforce ONON’s premium positioning.
Performance Analysis
ONON delivered record quarterly net sales, reaching 726.6 million Swiss francs, up 43% YoY on a reported basis. The direct-to-consumer channel, encompassing both e-commerce and retail, rose 45% YoY and now represents 38% of total sales, outpacing wholesale’s 41% growth. Asia-Pacific was the standout, with sales up 130% YoY, led by China, Japan, and Australia, and the region’s momentum is now a key growth pillar alongside established markets in the Americas and EMEA (Europe, Middle East, Africa).
Gross margin expanded to 59.9%, reflecting the higher D2C share and premium product mix. Apparel sales nearly doubled, up 93% YoY, marking the highest quarterly apparel revenue in ONON’s history. Store productivity exceeded expectations, especially in new flagship locations, and the company’s omnichannel model is yielding synergies as retail and e-commerce reinforce each other. Operating leverage improved, with SG&A as a percentage of sales declining, and adjusted EBITDA margin rose to 16.5%.
- Asia-Pacific Outperformance: Regional sales more than doubled, with China and Japan leading, as localization and targeted campaigns paid off.
- D2C Share Rises: Direct channels now drive 38% of revenue, with e-commerce and retail stores both contributing to higher margins and brand control.
- Apparel Momentum: Apparel net sales up 93%, reflecting product and sizing improvements and successful category campaigns.
Inventory and cash levels remain healthy, with inventory stable at 399 million Swiss francs and a robust cash position supporting ongoing investments. The company’s automation projects and new Atlanta warehouse are progressing, aiming to further drive efficiency and scalability.
Executive Commentary
"Our brand promise to ignite the human spirit through movement, along with ON's positioning as the most premium global sportswear brand in the marketplace, are resonating with our fans, allowing us to capture market share and drive on success."
Casper Capete, Executive Co-Chairman and Co-Founder
"We are applying quite a high level of prudence in the outlook...we have seen the strongest months in the history of the company in April, so a really good start into that remainder of the year. And at the same time, we factor in the potential that we see a slowdown in consumer demand driven by the uncertainties that are out there. But based on what we observe at the moment internally and in our channels and at our key account partners, we don't see this."
Martin Hoffman, CFO and Co-CEO
Strategic Positioning
1. Premium Brand and Pricing Power
ONON’s commitment to premium positioning is evident in its ability to raise prices—such as the Cloud6 launch at a higher price point—without dampening demand. This pricing power, a function of brand equity and innovation, is a crucial lever to offsetting currency and tariff headwinds. The company’s focus on quality, design, and cultural relevance (through campaigns with figures like Zendaya and Roger Federer) is deepening consumer loyalty and supporting margin resilience.
2. Omnichannel Execution and Controlled Wholesale Growth
ONON’s disciplined expansion across D2C and wholesale channels is yielding operational and brand benefits. The company is deliberately limiting wholesale door growth in mature markets like the US, prioritizing full-price sell-through and inventory health. New flagships and retail stores are exceeding productivity targets, and the omnichannel approach allows for cross-channel customer acquisition and retention, with technology investments enhancing customer experience and analytics.
3. Innovation Pipeline and Apparel Diversification
Product innovation remains central, with launches like CloudSurfer 2, Cloud6, and the experimental LightSpray technology (a new materials and automation platform) positioning ONON as a design leader. Apparel, now a fast-growing contributor, is benefiting from improved sizing, category focus (running, training, tennis), and strong campaign execution. The company is leveraging its own retail learnings to improve wholesale apparel presentation and sell-through, supporting the long-term goal of a more balanced footwear-apparel mix.
4. Supply Chain and Automation Investments
Automation in logistics and manufacturing is a strategic priority, with the Atlanta warehouse and LightSpray manufacturing projects aimed at boosting efficiency, flexibility, and resilience. These investments are intended to mitigate risks from tariffs, currency volatility, and supply chain disruptions, while enabling faster, more localized production and fulfillment in key global markets.
5. Leadership Transition and Organizational Depth
The transition to Martin Hoffman as sole CEO is positioned as a seamless evolution, with ongoing search for a new CFO. The leadership bench is described as deep and collaborative, with founders remaining actively engaged in product and brand strategy. The addition of industry veterans to the board and executive team is expected to further support ONON’s scaling ambitions.
Key Considerations
ONON’s Q1 2025 performance underscores the strength of its premiumization and innovation strategy, but the company faces a complex environment with currency headwinds, tariff uncertainty, and the need to sustain momentum across geographies and channels.
Key Considerations:
- Asia-Pacific as Growth Engine: Continued triple-digit growth in APAC will be key to achieving long-term targets and diversifying the revenue base.
- Apparel as Second Act: Apparel’s acceleration points to a credible path beyond footwear, but execution in both D2C and wholesale will determine category staying power.
- Pricing Power in Action: The ability to pass through price increases without demand erosion is a testament to brand health and should be monitored as tariffs and FX volatility persist.
- Omnichannel Synergy: Retail expansion and e-commerce investments are reinforcing each other, but careful store rollout and wholesale discipline are crucial to avoid channel conflict or inventory risk.
- Automation and Supply Chain Resilience: Execution on automation projects and LightSpray scalability will be critical for future margin expansion and risk mitigation.
Risks
ONON faces significant external risks, including incremental US tariffs (notably the 10% Vietnam tariff in the current outlook), ongoing FX headwinds from Swiss franc strength, and macro uncertainty that could dampen consumer demand. Execution risks also loom in scaling automation, maintaining brand heat, and managing channel inventory as the business grows more complex. While pricing power is a current strength, elasticity could be tested if broader economic conditions deteriorate or competitive intensity rises.
Forward Outlook
For Q2 and the remainder of 2025, ONON guided to:
- Constant currency net sales growth of at least 28% for the full year, implying 25% growth for the remaining nine months.
- Reported net sales of at least 2.86 billion Swiss francs for the year.
- Gross profit margin in the 60% to 60.5% range, and adjusted EBITDA margin of 16.5% to 17.5%.
Management highlighted:
- Strong pre-orders and wholesale demand for H2 product launches, including CloudSurfer Max and CloudBoom Max.
- Conservative planning to account for tariff and FX volatility, but confidence in brand-driven demand and premium positioning.
Takeaways
ONON’s premium brand execution and global diversification are delivering outperformance, but the ability to sustain pricing power and margin gains in the face of macro and regulatory headwinds will be critical to maintaining its upward trajectory.
- Asia-Pacific and D2C Strength: These are now the primary levers for top-line and margin expansion, with APAC growth de-risking reliance on mature markets.
- Premiumization as Moat: Brand equity and innovation are translating into pricing power and consumer stickiness, but must be defended through ongoing investment and execution.
- Watch for Execution on Automation: Successful ramp of LightSpray and logistics automation could unlock further efficiency and supply chain resilience.
Conclusion
ONON’s Q1 2025 results showcase the power of premium positioning, disciplined omnichannel growth, and innovation-led expansion, especially in Asia-Pacific and apparel. While the brand’s momentum appears robust, sustained outperformance will depend on navigating external headwinds and executing on supply chain and pricing strategies in a dynamic global market.
Industry Read-Through
ONON’s results highlight a broader shift in global sportswear: Premiumization and direct-to-consumer models are increasingly critical for margin expansion and brand control, especially as tariffs and FX volatility challenge traditional wholesale-heavy approaches. The company’s success in APAC signals that localized brand-building and retail execution can unlock significant growth, while apparel diversification is becoming a must-have for footwear-first brands seeking multi-category relevance. Competitors reliant on wholesale or lacking pricing power may struggle to match ONON’s resilience in the face of macro shocks, making innovation and operational agility more important than ever across the sector.