Increasing revenue without profit growth, Onrun bets on the Chinese market

When increased revenue does not lead to higher profits, the rapidly expanding On Running may need to consider how to better balance expansion and operating costs. Recently, On Running released its 2025 financial report, showing growth in net sales but a decline in net profit—indicating increased revenue without corresponding profit growth. Almost simultaneously, On Running’s largest flagship store in China opened in Shenzhen. In recent years, store openings to capture market share have become a main focus for On Running in China. Industry observers believe that market expansion can bring certain sales growth, but it also erodes profit margins. How to effectively balance store expansion and operating costs will be key for On Running to maintain growth in an increasingly crowded high-end sports market.

Decline in Net Profit

In 2025, On Running achieved net sales of CHF 3.014 billion, a 30% increase year-over-year; net profit was CHF 204 million, down 15.9%. Gross margin rose from 60.6% to 62.8%. In Q4 2025, net sales reached CHF 743.8 million, up 22.6% year-over-year; net profit was CHF 69.1 million, down 22.9%; gross profit margin increased from 62.1% to 63.9%.

Overall, On Running’s annual net sales surpassed CHF 3 billion for the first time, entering a new phase. Co-founder and Co-CEO David Allemann stated, “Surpassing CHF 3 billion in annual revenue with record profitability validates our vision to build the world’s highest-quality global sportswear brand.” However, declining net profit seems to be becoming a norm for On Running. The company has experienced profit declines or losses over several quarters.

According to financial data, On Running posted a loss in Q2 2025, with net sales of CHF 749.2 million, up 32% year-over-year and 38.2% at constant currency; net loss was CHF 40.9 million. In Q1 2025, net profit fell 38% to CHF 56.7 million; in Q3 2024, net profit declined 48% to CHF 30.5 million.

We attempted to interview On Running for insights on these performance issues, but as of press time, no response has been received.

Senior researcher Jiang Han from Pangu Think Tank believes that aggressive market expansion leading to soaring operating costs is a major reason for On Running’s increased revenue but stagnant or declining profits. “To maintain a high-end image, On Running has opened large numbers of direct-operated stores in top commercial districts, with high rents and labor costs directly eating into margins. Meanwhile, marketing expenses remain high, including signing top athletes like Federer and frequent cross-industry collaborations, which keep sales and management costs a significant portion of revenue, severely squeezing net profit margins. The scale effects have not yet fully offset fixed costs. Heavy upfront investments in infrastructure and brand building are still in the lag phase of returns, causing revenue growth to outpace profit realization—a typical ‘strategic loss’ scenario,” Jiang explained.

On Running is a Swiss high-performance sportswear brand known for innovative midsole technology and a premium positioning, mainly focusing on running shoes. In recent years, it has gradually expanded into apparel and accessories, leveraging differentiated product experiences to become a rising force among global sports brands. Since entering the Chinese market in 2018, rapid growth has made it a popular sportswear brand. During its latest earnings call, On Running mentioned, “By 2025, our global brand awareness has approached 30%.”

Strong Performance in China

Over the past two years, On Running’s performance in China has been impressive. Chief Commercial Officer Britt Olsen stated, “China’s position in On Running’s global footprint is rapidly rising. In 2025, the Asia-Pacific market performed very strongly. There are many reasons for our visit here, one of which is that China is an extremely important market for On Running. Overall, we are maintaining good growth in the US, Europe, and the Americas, and we have always focused on achieving a more balanced regional layout and growth structure globally.”

Financial data shows that in 2025, On Running’s net sales in the Asia-Pacific region, including China, reached CHF 511 million, a 96.4% increase. The Asia-Pacific region outpaced other areas significantly. EMEA (Europe, Middle East, Africa) achieved CHF 762.7 million, up 32%, while the Americas reached CHF 1.74 billion, up 17.6%.

China’s importance is underscored by over 90% growth, with Olsen emphasizing that China’s role in On Running’s global strategy continues to strengthen. China is currently the fastest-growing market in On Running’s global portfolio, and this trend is expected to continue in the coming years. The company also revealed that China has become the second-largest and fastest-growing market worldwide.

Given China’s market potential, On Running is accelerating its expansion there. Recently, the brand opened a flagship store in Shenzhen’s MixC World, covering 802 square meters—the largest store in China to date. Inside, the store features displays highlighting running shoe technology. Additionally, On Running’s co-CEO and CFO Martin Hoffmann has stated that the next five years are critical for China’s development, with plans to reach 100 stores by 2026 and to make China account for 10% of global sales. Since entering China in 2018, On Running has opened over 80 stores in more than 30 cities in less than eight years.

Crowded Market

Looking at the entire sports consumption market, On Running’s products are generally priced above 1,000 RMB, targeting the high-end running shoe segment, which faces stiff competition.

Major sports brands like Nike, Adidas, and Asics have long established a presence in China’s mid-to-high-end sportswear market, with a broad consumer base. Financial data shows that in 2025, Adidas’s footwear revenue grew 12%, with the ADIZERO running shoe family increasing over 30%. Asics focuses on professional running, streetwear, and ball sports, with its professional running segment reaching JPY 36.35 billion in sales in 2025, up 11.2%. Besides these giants, emerging niche brands like Brooks (invested in by Warren Buffett), HOKA (with a similar growth trajectory to On), and Lululemon, which has accelerated expansion in China over the past two years, are also increasing their presence.

Furthermore, Chinese sports companies are rapidly rising and expanding into the high-end running shoe market. For example, Xtep’s subsidiary Saucony is positioned in the mid-to-high-end segment, with retail sales up over 30% in 2025. Brands like Anta and Li Ning are also intensifying their focus on running shoes, with many models priced above 1,000 RMB.

Faced with intensifying competition, On Running is also diversifying its business. The company is expanding product categories from solely running shoes to include apparel and accessories. As product lines grow, sales of accessories and apparel are increasing rapidly. Financial data shows that in 2025, On Running’s footwear sales reached CHF 2.804 billion, up 27.5%; apparel sales reached CHF 17 million, up 68.2%; and accessories sales hit CHF 3.96 million, up 124.1%.

On Running also stated, “Over the past 16 years, we have created a previously nonexistent market space through innovation, and apparel will follow a similar path. Next year, we will introduce new products and concepts, with a key focus on ‘winning female consumers.’”

Zhou Ting, director of the KECHER Research Institute, told Beijing Business Today that On Running’s brand and product advantages in running are quite clear, with significant growth potential. However, challenges include the narrow product category and the professional nature of its customer base.