From Professional Running Shoes to Full-Category Expansion: The Brand Identity Crisis Behind On’s Growth

Swiss high-end running shoe brand On Holding recently announced a management change, stating that current CEO Martin Hoffmann will step down on May 1, 2026, with co-founders David Allemann and Caspar Coppetti taking over as co-CEOs. The company also forecasted that this year’s sales growth rate will slow more than expected.

On the day of the announcement, On’s stock price plummeted 11.19%, closing at $35.16, erasing about $1.4 billion in market value. The next day, March 26, the stock continued to fall 8.67% to $32.11, with a low of $31.41.

The sharp volatility in the capital market is seen as a reflection of strategic uncertainty and profit concerns during the brand’s transformation period.

The company highly praised the outgoing leader, noting that he played a key role in maintaining the corporate culture and financial discipline from the startup phase to the milestone IPO. Hoffmann served at the company for 13 years, leading On to list on the New York Stock Exchange in 2021 and driving a leap in annual brand sales—by 2025, On’s net sales reached 8B Swiss francs (about 26.16 billion RMB), more than tripling compared to five years earlier.

However, as On went public and expanded its scale, this originally small and beautiful company also began facing issues common among large competitors—“scale anxiety” and “growing revenue without increasing profit.”

Financial data shows that in 2025, On’s net sales reached 3.01B Swiss francs, a 30% increase year-over-year, with a net profit of 204 million Swiss francs (about 1.77 billion RMB), down 15.9% year-over-year. In the fourth quarter, net sales were 743.8 million Swiss francs (about 6.45 billion RMB), up 22.6% year-over-year, with a net profit of 69.1 million Swiss francs (about 600 million RMB), down 22.9%.

To break through growth bottlenecks in the single running shoe category, On has accelerated expansion into apparel, outdoor gear, and other fields since 2023, upgrading its clothing business to an independent operation segment. In 2025, clothing sales grew 68.2% year-over-year, and accessories grew 124.1%, far surpassing the core footwear business growth of 27.5%.

Some sports equipment distributors told reporters that they have noticed that in recent years, besides shoes, On has increased its apparel products. Some fitness and yoga instructors also said they are being promoted to wear On’s clothing. “I remember this brand used to only sell running shoes, now they’re also pushing sportswear,” one fitness coach told reporters.

However, while category expansion has led to scale growth, it has also raised doubts—professional recognition of core running shoes is being diluted, and market concerns about “lack of focus” continue to rise.

On’s development path reminds people of another sports brand, Lululemon, which initially established its market position with a pair of specialized yoga pants. But after new management took over, the company launched a full-category expansion, extending product lines to men’s wear, running shoes, golf apparel, and 15 categories in total, sinking channels to outlet malls and launching mass-market products. Behind the rapid short-term revenue growth is a lack of core business strength and brand positioning dilution: in 2025, the brand’s annual net revenue grew only 5% to $11.1 billion, the slowest since its IPO; at the same time, net profit declined 12.97% to $3.01B. Additionally, many loyal female customers associated with its core yoga products complain that the brand has “lost its professionalism,” and new customers find it hard to establish a clear perception. Before leaving, Calvin McDonald admitted, “Our casual social products have become outdated and no longer resonate with consumers.”

Lululemon’s aggressive expansion has also drawn frequent criticism from its founder, Chip Wilson. He accused management of being “driven by short-term financial thinking,” and argued that Lululemon has shifted from a “yoga expert” to a “mediocre general sports brand.”

Whether it is On or Lululemon, these brands, younger than Nike and Adidas, have sought to rise to the top amid the recent global sports boom, but they also reflect a core contradiction in category expansion: professionalism is the foundation of their identity, while scale often requires mass appeal. How to balance these two aspects has become a crossroads for these brands today.

(This article is from Yicai.)