On's Q3 Sales Rise 17.2% as Wholesale Outpaces Slipping DTC

On grew Q3 net sales 17.2% year over year to 931.4 million Swiss francs, but the athletic brand admitted it missed the "high bar" it set for itself in direct-to-consumer growth, CFO Frank Sluis said on an earnings call Tuesday.

The numbers tell a split story. DTC share rose 2.6 percentage points to 42.2% of sales, and DTC net sales jumped 25% to 393.3 million Swiss francs — roughly $477 million at press time, per a company release. Yet that fell short of analyst expectations. Wholesale, historically On's laggard channel, grew 12.2% to 538.2 million Swiss francs and outperformed.

On reiterated its full-year sales outlook, now including U.S. tariff refunds.

Why did wholesale beat and DTC miss?

William Blair analysts had expected the opposite result. "Our concern into the print had largely been on wholesale, where continued promotional pressure and planned lower sell-in created downside risk to Street expectations," they wrote in an emailed note Tuesday.

Their verdict after the numbers: "Our initial read is that the quarter helps alleviate our near-term concern around the pace of wholesale growth, though the DTC miss leaves the composition of growth somewhat more mixed. To be sure, the results suggest On is navigating the promotional wholesale backdrop better than we had anticipated, particularly given the strength in underlying margins."

How is On holding pricing?

Sluis told analysts On maintained full-price discipline across its markets despite softer online traffic and a heavier promotional environment across the category. In North America, the brand expanded shelf space with retail partners and won ground with younger shoppers during the back-to-school season.

Heading into the holidays, On's partners hold healthy inventory levels, and the company expects to keep operating a premium-pricing model even as competitors discount more aggressively.

What happens in Q4?

Executives told analysts On expects growth to accelerate versus Q3 in the fourth quarter, led mostly by DTC. That projection puts the channel that just disappointed back at the center of the company's holiday-quarter case — and makes the DTC rebound the metric to watch when On reports its full-year results.