By Teresa Rivas

Boots may be made for walking, but comfy shoe stocks are winning the race.

The pandemic is a distant memory, but a few things have carried over from that bleak period: Everything seemingly costs double its 2019 price, for example, and everyone is wearing sneakers everywhere. Take it from On Holding co-CEO Martin Hoffmann, who spoke with Barron's after the company's upbeat first-quarter results sent the company's stock up almost 12% on Tuesday.

"These products provide a different level of comfort for your daily life, and this is important for your happiness," he says. "At the same time I think everyone understands more and more that movement is important."

That was on display in the Switzerland-based company's latest results, whose earnings and sales topped analyst expectations. Its footwear sales were up over 50% year over year, while its apparel sales more than doubled.

The company also raised its full-year net sales outlook, saying it now expects 28% growth thanks to strong demand, although it tweaked its adjusted earnings before interest, taxes, depreciation, and amortization (otherwise known as Ebitda) margin to 16.5%-17.5% for the year, down from a range of 17%-17.5%, given uncertainty surrounding tariffs.

Tuesday's jump put the stock up nearly 5% this year, ahead of the broader market and many peers tracked by the Consumer Discretionary Select Sector SPDR exchange-traded fund. Hoffman touts the company's LightSpray technology, which significantly reduces carbon dioxide emissions, as well as the manual labor required to make its products, which also gives it more supply-chain flexibility.

Tariffs have hit the footwear industry hard. Shoemaking tends to be labor-intensive, so the U.S.-China trade war that threatened to upend its sourcing and hurt consumer demand is a clear headwind.

Not surprisingly, shares of Puma, Deckers Outdoor, Nike, Wolverine World Wide, and other shoemakers soared after the U.S. and China agreed to pause levies over the weekend, and if the agreement holds, the industry should be able to restart its winning streak.

"The announced reset in U.S./China trade relations and potential for a lasting middle ground reduce direct margin risks and indirect recession odds," wrote Baird analyst Jonathan Komp on Monday, noting that footwear companies "have highlighted greater flexibility in shifting production over a six-to-12 month period, potential price increases, and other limiting actions" to help them mitigate the tariff impact should it return.

On has been a consistent leader in the space, rising 87% in the past year, but it's not the only shoe stock that has shined despite tariffs. Birkenstock Holding has also outperformed the broader market over the past 12 months. Year to date, Crocs shares are approaching a double-digit gain, and while Adidas' rise has been smaller, it's still ahead of the S&P 500 index since the start of 2025. Investment firm 3G Capital recently agreed to buy Skechers USA for a 30% premium.

Not every stock has benefited despite big bounces this week: Laggards like Nike and Under Armour, which also reported Tuesday, remain out of favor. Yet overall, if tariffs fade from the headlines, sneaker and comfortable-shoe makers seem poised to keep doing well: Athleisure has transcended fashion trends, and officewear has become more casual postpandemic.

On's Hoffmann puts his money where his feet are: He wears Cloudmonsters for running and Cloudtilts as his everyday shoe.

Write to Teresa Rivas at teresa.rivas@barrons.com

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May 14, 2025 03:00 ET (07:00 GMT)

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