On Holding continued to run hotter than Wall Street expected in the fourth quarter as the Zurich-based running brand posted sales and profits that exceeded expectations.

On Tuesday, the company said fourth-quarter net sales rose 22.6 percent to 743.8 million Swiss francs. Analysts were expecting a 19.9 percent increase in sales. Adjusted diluted earnings per share decreased to 0.25 Swiss francs from 0.33 francs the prior year, but still came in better than the 0.21 Wall Street had projected.

On said net sales through direct-to-consumer sources rose 21.7 percent to 360.6 million Swiss francs, while the wholesale channel increased 23.4 percent to 383.2 million francs.

Sales in the Europe, the Middle East and Africa region rose 24.2 percent to 183 million Swiss francs, while the Americas division was up 12.8 percent to 434.3 million Swiss francs and Asia-Pacific increased 70.8 percent to 126.5 million Swiss francs.

By category, sales from shoes rose 20.8 percent to 687.3 million Swiss francs, while apparel sales increased 38.3 percent to 45.1 million Swiss francs, and accessories sales gained 117.7 percent to 11.4 million Swiss francs.

The company also managed to post sales that exceeded 3 billion Swiss francs for the first time last year — an increase of 30 percent that just inched past analyst expectations of a 29.3 percent sales gain.

Adjusted diluted earnings per share decreased to 0.80 Swiss francs from 0.97 Swiss francs for the year.

On expanded its retail fleet last year, adding 18 doors to bring the total to 70 stores globally. In those stores, apparel and accessories account for 15 percent of sales, Martin Hoffmann, chief executive officer and chief financial officer, told WWD. And in the flagships, the percentage is closer to 20.

Apparel and accessories now account for 7 percent of overall sales.

“We’re very happy with apparel,” he said. “Ten percent of new customers come to us through apparel now. It’s a strong acquisition category and helps us grow our basket size. The opportunity is massive.”

The collection, which blends performance attributes with fashion styling, helps set On apart, he said. “The goal is to combine performance and sport. Sports is the new fashion and movement is the new luxury,” he said.

Hoffmann said that the new stores are about 40 percent larger on average than the older units, “a direction we will continue,” and a move that better showcases apparel. The plan, he said, is to add between 15 and 20 stores this year.

“DTC grew faster than wholesale,” he said, which indicates the “importance of connecting with the customer directly.”

Hoffmann said On’s continued ability to grow is proof that its premium positioning is working.

“This is not a moment to engage in sales events, but to execute our strategy,” he said, pointing to the “super-strong fourth quarter, which was even better than expected, across all regions, and all channels: e-comm, retail and wholesale.”

Clearly, the company is continuing to expand on several fronts at once and has no intention of letting up.

“Surpassing the CHF 3 billion [or nearly $4 billion] annual revenue milestone with record profitability is a profound validation of our vision to build the world’s most premium global sportswear brand,” said David Allemann, cofounder and executive co-chairman. “We are witnessing a fundamental societal shift, as people globally replace traditional markers of status with a commitment to health, longevity and performance. On is uniquely positioned to deliver what this discerning consumer demands — from scaling breakthrough innovations like LightSpray to deepening our cultural resonance and delivering our fullest brand expression from toe-to-head. We are building a brand designed for the future of movement.”

Hoffmann said this year will represent On’s “most exciting product pipeline ever.” That will include the scale of its popular LightSpray technology. He said that includes opening a factory in South Korea with 30 times more production capacity. The LightSpray Cloudmonster 3 Hyper mass market shoe with a 3D-printed upper is scheduled to be launched on Thursday.

In addition to LightSpray, On will also lean into innovation in its core running franchises and expand its apparel offering.

As a result, the firm projected that net sales this year will grow by at least 23 percent on a constant currency basis, reaching at least 3.44 billion Swiss francs. It is also expecting a gross profit margin of at least 63 percent and an adjusted EBITDA between 18.5 percent and 19 percent.

In advance of the earnings release, Truist Securities’ analysts maintained their buy rating on the stock, adding that they remained “bullish” on the company and sees “meaningful room for expansion across regions/channels/categories with a packed 2026 product pipeline.” They cited growth in the company’s footwear offerings, notably the Cloudrunner 3 and LightSpray Cloudboom Strike.

Shares are down 22 percent from their peak in May 2025, which represents an opportunity for investors, the Truist team said.  

Tom Nikic of Needham & Co. also has a buy rating on the stock. “We believe On continues to exhibit momentum and will remain a compelling growth story in 2026,” he wrote in an analysis. “Brand awareness continues to grow globally, and we believe they are getting more meaningful growth contributions from Asia, EMEA, and apparel.”

However, there are a couple of headwinds to consider, he said: the impact of tariffs and the strength of the Swiss franc which will “take a meaningful chunk out of revenues this year.”

Dylan Carden of William Blair said the stock remains his “top pick for 2026,” and believes this year will be pivotal for the company despite heightened competitive threats from Hoka and Nike. He rated the stock “outperform.”

Cristina Fernandez of Telsey Advisory Group also rated the stock “outperform,” citing strong product introductions for the Cloudrunner 3 and strength of apparel in the direct-to-consumer channel.

The team at Piper Sandler cited the planned footwear introductions as positive, and “superior to peers.”