On’s 23% Growth Target Proves Premium Brands Don’t Need Discounts
Most brands slash prices when consumers get nervous. On is aiming for at least 23% growth while protecting a 64.5% gross margin. That is not luck. It is brand discipline.
Most brands discount their way into irrelevance, then call it “responding to the consumer.” On is targeting at least 23% sales growth in 2026 while aiming for a gross margin of at least 64.5%. That is what a brand with a backbone looks like.
On reported its second-quarter results on August 11, but the more useful story for operators is the standard the Swiss sportswear company set before the numbers landed: grow quickly, stay premium, and do not confuse a sale with a strategy.
That should make a lot of marketing departments uncomfortable. It should. Too many businesses spend a fortune acquiring attention, then hand the customer a 20% discount at the first sign of hesitation. They train people to wait for a code, wreck their margins, and wonder why the brand feels interchangeable.
On is trying to play a different game.
The core story: On is selling more than shoes
In its first quarter ended March 31, 2026, On delivered CHF 831.9 million in net sales, up 14.5% on a reported basis and 26.4% in constant currency. More importantly, gross profit margin rose to 64.2%, from 59.9% a year earlier. Net income rose 82.2% to CHF 103.3 million.
Those are proper numbers. But they matter because they sit underneath a deliberate commercial position.
On sells running shoes at premium prices, with many models priced at US$150 and above. Reuters reported in March that the company expected at least 23% constant-currency sales growth for 2026, after 30% growth in 2025. It also said On expected annual gross margin to reach at least 63% at that point; after its first-quarter performance, the company lifted that margin outlook to at least 64.5%.
Read that again: it is not merely trying to increase revenue. It is telling the market it can grow while preserving the economic engine that makes growth worth having.
There is a world of difference between those two things.
A business can buy revenue with paid ads, influencers, discount codes, wholesale incentives and free shipping. Plenty do. The revenue chart looks lovely until you inspect the margin, repeat purchase, return rate and cash flow. Then it looks like someone lit the furniture on fire to stay warm.
On’s first-quarter channel mix explains why its strategy is worth watching. Direct-to-consumer sales reached CHF 322.3 million, up 16.4% reported and 28.7% in constant currency. Wholesale sales reached CHF 509.6 million, up 13.3% reported and 25.1% in constant currency.
That balance matters. Own the customer relationship and you build data, loyalty and margin. Keep credible wholesale partners and you earn reach, discovery and social proof. Go all-in on either one and you can create a new problem. On is expanding both, rather than pretending there is a single magic channel.
Premium is not a price point. It is an operating system.
Every founder wants “premium positioning” until premium requires saying no.
No to constant promotions. No to chasing every trend. No to distribution that makes the product feel like it is everywhere and nowhere. No to marketing that gets clicks but cheapens the thing people are meant to desire.
That is why On’s numbers deserve attention. Its apparent strength is not one celebrity, one shoe silhouette or one sharp campaign. It is a system: product innovation, controlled distribution, direct customer relationships, brand-led retail and deliberate expansion across categories and markets.
In the March quarter, Asia-Pacific sales rose 44.4% on a reported basis, or 61.4% in constant currency, reaching more than 20% of global sales. Apparel grew 45.1% reported, or 57.5% in constant currency. Accessories grew 70.7% reported, albeit from a much smaller base.
This is what good brand expansion looks like. You do not wake up one morning and decide you are a lifestyle business because the PowerPoint needs another growth pillar. You build trust in a core product, then use that trust to earn permission into adjacent categories.
On first earned the right to sell more to its customers by making footwear that sat at the intersection of performance, design and everyday identity. That last bit is crucial. People may buy a shoe because of cushioning or construction. They recommend it because it says something about them.
The best brands do not simply answer, “What does this product do?” They answer, “Who do I become when I choose it?”
The overlooked lesson: discounting is often a positioning failure
Here is the uncomfortable bit: when a business needs a permanent promotion calendar, the problem is usually not the calendar.
It is often one of four things: the product is not distinct enough, the audience is wrong, the brand promise is vague, or the business has built a cost structure that demands more volume than the market wants to give it at full price.
Discounting is sometimes sensible. Excess inventory is real. A new customer offer can be rational. A seasonal clearance is normal. I am not saying never reduce a price.
I am saying stop pretending that making your product cheaper is the same as making it more compelling.
Reuters reported that On’s fourth-quarter sales in 2025 rose 22.6% to CHF 743.8 million, helped by limited discounting through the holiday period. That is a meaningful phrase: limited discounting. The company was not refusing to compete; it was refusing to turn itself into a bargain bin.
That discipline is particularly valuable when consumer spending becomes polarised. Reuters noted that On’s focus on affluent customers had helped it while brands exposed to lower-income consumers faced pressure. Some people hear that and think the lesson is simply, “sell to rich people.” That is lazy analysis.
The real lesson is to know exactly who can afford your offer, why they will pay for it, and what you must keep true for them to continue believing the price is fair.
Premium customers are not fools. They do not pay more because they enjoy being mugged. They pay more when the product, experience, status, service and confidence add up to less hassle and more value in their life.
Why product still does the heavy lifting
Marketing can amplify a product. It cannot permanently rescue a mediocre one.
On’s current growth narrative is tied to product platforms such as LightSpray, its technology-led manufacturing approach, alongside footwear launches and expansion into apparel. Piper Sandler said in July it expected strong direct-to-consumer momentum and cited higher-priced franchises including LightSpray and the ROGER Pro 3 as areas of strength.
Whether every product lands is beside the point. The company is giving people a reason to look again. That is the job.
Too many brands mistake content volume for innovation. They post five times a day, make 40 creator videos, hire an agency to invent a new colour palette, and change absolutely nothing about the offer. Then they complain that performance marketing has become expensive.
Of course it has. You are paying rent in an auction to say the same forgettable thing as everyone else.
A genuinely improved product gives marketing leverage. A distinctive product gives customers a story to repeat. A premium product gives the company room to invest in service, design, retail and retention. That is the flywheel. It is not sexy in a board meeting, but it pays the bills.
The contrarian angle: not every business should copy On’s premium play
Let’s not get carried away. “Premium” is now one of the most abused words in business, right up there with “community” and “disruption.” Slapping it on a landing page does not make it true.
On can pursue this model because it has product credibility, a clear design language, international demand and enough financial strength to invest. At March 31, it had CHF 1.02 billion in cash and cash equivalents. That buys patience.
A smaller company with weak cash flow should not imitate the glossy bits—flagship stores, expensive ambassadors, cinematic campaigns—while ignoring the boring foundation. You do not build a premium brand by burning money elegantly.
Start narrower. Own one customer, one use case and one proof point. Charge enough to survive. Make the experience tight. Give people a reason to come back without a coupon dangling from their inbox.
That is how premium is built: not by declaring superiority, but by delivering it repeatedly.
What this means for you
If you run a business, do these five things this week.
First, audit every discount you offer. Write down the purpose of each one: inventory clearance, acquisition test, retention tool or panic. If the honest answer is panic, kill it or put an end date on it.
Second, calculate gross margin by channel, not just in total. A customer acquired through your website, a marketplace, a retailer and an affiliate is not the same customer economically. If you cannot see that clearly, you are flying blind.
Third, ask one brutal question: what would make a customer pay full price tomorrow? Not “what campaign would persuade them?” What is materially better about the product or experience? If you cannot answer in one sentence, your marketing problem may actually be a product problem.
Fourth, protect a single recognisable brand asset. It could be a design detail, a product mechanism, a point of view, packaging or a ritual. But make it yours. Being broadly appealing is not the same as being memorable.
Finally, stop measuring marketing as an activity list. Measure whether it strengthens pricing power. If your campaigns generate awareness but make customers more promotion-sensitive, you are not building a brand. You are renting attention.
On’s 23% growth target is not impressive because it is a large percentage. It is impressive because the company is trying to grow without apologising for its price.
That is the bit worth stealing. Not the shoes. Not the celebrity associations. Not the aesthetic.
Build something people can identify from across the room. Make it good enough to be bought at full price. Then have the nerve to protect it.