Can superstar Kylian Mbappé help the sports brand On get out of its slump?
With its entry into football, On is entering a billion-dollar market. However, the Zurich-based company has some problems in its core business.
On, a Zurich-based sportswear brand, aims to steer superstar Kylian Mbappé's sports brand On out of a slump. The company has secured Mbappé as its new brand ambassador in football, entering the lucrative football market despite recent difficulties. Mbappé is one of the world's top footballers and a symbol of his sport. The move comes after On announced in June its intention to enter the football business.
The news is a welcome boost for On, as its shares have lost over 40% since the beginning of the year, with an August drop of more than 20%. The company missed its sales growth targets and its stock was worth less than at its 2021 IPO. On's Co-Chiefs David Allemann and Caspar Coppetti present the company's future plans with confidence during their investor meetings, describing their success as a "premium playbook" and planning to focus on "premium growth" henceforth.
The goal is to become a "high-quality earnings compounder," with the operating profit growing faster than sales. To address investor concerns, On plans to conduct its first stock buyback in history, repurchasing $1 billion worth of shares. The entry into football with Mbappé is the main attraction for investors, as they believe there is room for premium products in a market projected to reach $38 billion in a few years.
On also intends to expand into golf, as golfers typically spend more on equipment than other sports. However, they emphasize that football presents a much larger growth potential. The company plans to double the number of its stores, currently 100, to achieve its new goals. They aim to have a gross margin of over 65% by 2029, up from around 30% in 2025, requiring higher prices for shoes and clothing.
The launch of the new football collection is planned for 2027, with On aiming to be a premium brand. With the Light-Spray technology, they intend to differentiate their shoes, particularly in terms of ball feel. According to marketing expert Stefan Vogler, On's recruitment of a superstar like Mbappé is crucial for entering the football market, as it showcases the brand's value beyond running and shoe technology.
Written by urgent.news from NZZ Wirtschaft's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
