Swiss sportswear brand On signs Kylian Mbappe to challenge rival industry giants

Swiss sportswear company On Holding made a bold move on Friday by signing football star Kylian Mbappe, a step aimed at bolstering its presence in the competitive sportswear industry. However, the Swiss brand faces challenges in leveraging this high-profile partnership to drive sales growth in the crowded soccer market. On, known for its unique "hollow pod" soles, is up against formidable rivals Nike, Adidas, and Puma, all of whom have struggled to expand their football divisions.

The brand's recent miss on second-quarter net sales estimates has alarmed investors, with the company's shares dropping about 40% this year. Despite this, On's price-to-earnings ratio of 18.7 suggests that investors are optimistic about future growth. The company's acquisition of market share in the sportswear industry, following its successful partnership with tennis star Roger Federer, has raised hopes.

However, soccer remains a highly challenging sector to enter, as noted by analysts. Adidas and Nike have heavily invested in soccer, outfitting 14 and 12 national teams during the recent FIFA World Cup, respectively. On's strategy hinges on its LightSpray robotic manufacturing technology, currently utilized in its running shoes.

The company declined to disclose the financial details of the Mbappe deal, but it did mention that it includes both cash and equity components. Former France star Thierry Henry has also been appointed as director of On's soccer business. While the move is expected to enhance On's credibility in the soccer market, analysts remain skeptical about whether the high cost of the partnership will translate into sustainable growth.