Since entering the Chinese market in 2018, On Holding AG has broken into the running community and joined the ranks of "new middle-class essentials," with performance surging and popularity rivaling established athletic giants like Nike and Adidas. However, according to the latest financial results, this running industry newcomer appears to be losing momentum. In the first half of 2025, On Holding AG's net profit declined, with the second quarter showing losses. The Q2 losses serve as a reminder that the rapidly expanding company needs to slow down. Issues such as high costs from rapid expansion and decisions about maintaining professional technical focus versus luxury marketing positioning are all challenges On Holding AG needs to clarify and resolve in its future development.

**Declining Net Profit Margin**

According to the latest financial data, On Holding AG's net sales in the first half of 2025 reached 1.476 billion Swiss francs, up 37.2% year-over-year; net profit was 15.8 million Swiss francs, down 87.1% year-over-year. The company expects full-year 2025 net sales to grow by at least 31% in constant currency terms (previously at least 28%).

Notably, On Holding AG posted losses in Q2 2025. Financial results show Q2 net sales of 749.2 million Swiss francs, up 32% year-over-year and 38.2% in constant currency; net loss of 40.9 million Swiss francs compared to a profit of 30.8 million Swiss francs in the same period last year. The company attributed the Q2 losses to "foreign exchange impact."

On Holding AG co-founder and Executive Co-Chairman David Allemann remained positive about Q2 performance. "On is playing the long game, and we delivered on our 38.2% net sales growth target in constant currency, with this quarter proving our strategy is working—from diversifying our iconic footwear franchise to our stellar growth in apparel and global brand footprint," he stated.

From the financial reports, On Holding AG's profitability is declining. Beyond the H1 2025 net profit drop, the company has seen net profit declines in multiple quarters. According to financial data, Q1 2025 net profit was 56.7 million Swiss francs, down 38% year-over-year; Q3 2024 net profit was 30.5 million Swiss francs, also declining year-over-year.

Additionally, On Holding AG's net profit margin shows a downward trend. In H1 2025, the net profit margin fell from 11.4% in the same period last year to 1.1%. Specifically, Q2 net profit margin dropped from 5.4% in the same period last year to -5.5%.

**Double-Edged Expansion**

From a market perspective, On Holding AG is quite popular, especially in the Asia-Pacific region led by China. According to financial data, H1 2025 Asia-Pacific net sales reached 239.7 million Swiss francs, up 114.8% year-over-year, making it the fastest-growing region across all On Holding AG markets.

The Chinese market is becoming one of On Holding AG's core strategic markets. While the company hasn't disclosed specific Chinese market sales figures in its financial reports, the store expansion pace indicates increased focus on the Chinese market. Since opening its first directly-operated store in Shanghai in 2019, On Holding AG has continuously expanded its Chinese store network. In 2023, the company opened 10 directly-operated stores in China; in 2024, it opened 17 directly-operated stores.

According to public data, On Holding AG currently has 70 stores in the Chinese market, including at least 30 directly-operated stores. According to the company's plans, it hopes to exceed 100 directly-operated stores in China by 2026. To achieve this goal, On Holding AG would need to accelerate store openings, requiring at least 30 new stores annually to approach the target.

On Holding AG Co-CEO and CFO Martin Hoffmann previously stated: "If we were to give the next five years a theme, it should be 'the rise of China.'"

On Holding AG's stores are almost exclusively located in high-end shopping centers, meaning significant store rent and related expenses. Additionally, marketing investments represent a major expenditure for the company. In the Chinese market, On Holding AG partners with Weimob to implement omnichannel marketing strategies, precisely targeting middle-class consumers through Tencent and Xiaohongshu platforms, using a combination of KOC (Key Opinion Consumer) seeding and WeChat Moments advertising.

Globally, On Holding AG partnered with tennis legend Roger Federer in 2019 and signed a long-term cooperation agreement with Hollywood actress Zendaya Coleman in 2024. According to public data, On Holding AG's marketing expenses have accounted for approximately 10% of net sales in recent years.

According to Zhou Ting, Dean of VIP Customer Research Institute, persistently high store costs and rapidly growing marketing expenses are the main reasons On Holding AG isn't profitable. On Holding AG's development path is largely consistent with other brands in the Anta Group, relying on channels and marketing to drive brand growth. This model shows obvious short-term results, but if brand management and customer operations can't keep up, it easily loses momentum.

"On Holding AG's early-stage heavy investment in channel development and brand awareness building, losing money first to make money later, was viable in earlier years but won't be effective in the future. Companies need to establish completely new brand operation logic, such as channel digitization, marketing servicification, and product customization. On Holding AG has now entered a situation where no store expansion means no (or little) growth, and no promotion means no (or little) sales. Without strategic and tactical fundamental changes, opening more stores and increasing promotion will both result in greater losses," Zhou Ting added.

**Professional or Luxury Brand**

For many consumers, the most direct impression of On Holding AG is "expensive." "Over 1,000 yuan, never discounted," the brand is jokingly called "focused on harvesting the middle class." According to product information from On Holding AG's flagship store, running shoes are priced above 1,000 yuan, with one model, the On Cloudrise Cyclon women's lightweight high-performance running shoe, priced at 1,890 yuan.

Founded in 2010, one of the brand's founders, Olivier Bernhard, was an Ironman Triathlon world champion with unique insights into running shoe comfort. Initially, On Holding AG's vision was to create professional running shoes. With its CloudTec patented sole technology, the first shoe featuring this technology quickly entered European markets, then successfully entered U.S. and Japanese markets.

After entering the Chinese market in 2018, On Holding AG was similarly well-received. In just six years, its influence has rivaled athletic giants Nike and Adidas. On Holding AG went public on the NYSE in 2021, with annual sales exceeding 10 million pairs and a global market share of 2%.

On Holding AG's "die-hard fans" believe the high premium reflects the brand's technical foundation. Besides the famous CloudTec midsole technology, core technologies include the Speedboard propulsion plate and LightSpray upper technology. Lightweight design, cushioning, and durability are On Holding AG's main selling points.

However, some consumers view On Holding AG's high premium as merely a marketing tactic to harvest the middle class. Judging from recent marketing approaches, rather than focusing on professional running shoe marketing, the brand emphasizes its high-end or even luxury positioning. "Running circle aristocrat," "new middle-class essentials," "middle-class harvester" have become On Holding AG's labels. The brand also favors luxury collaborations, such as partnering with luxury brand LOEWE for co-branded running shoe series.

Some consumers joke that buying On Holding AG isn't about purchasing running shoes, but about middle-class identity recognition.

Li Tong, with nearly ten years of running experience, said that when On Holding AG first entered the Chinese market, it was very popular among "runners" who appreciated the foot feel. But since the brand was marketed as a middle-class standard, On Holding AG buyers seem to have moved away from running, becoming middle-class consumers.

Zhou Ting stated that On Holding AG has obvious brand and product advantages in the running sector with great development potential, but its challenges include category singularity and customer specialization. In the context of athletic fashion trends, On Holding AG's professional running advantages may not necessarily generate positive market feedback when customers lack sufficient expertise or don't particularly value product performance.

Running enthusiast Wang Jia mentioned that On Holding AG's store communities seem to prefer "new friends," with many community activities excluding existing users in favor of new users, causing dissatisfaction among some customers.

According to independent retail commentator Ma Gang, On Holding AG's performance in community and social marketing isn't as strong as domestic brands. For a new brand that initially performed well in marketing but inadequately managed supply chains or product lifecycle management, this leads to decent sales but poor profit performance.