Can ON Holding's Direct-to-Consumer Push Help It Outgrow Wholesale Reliance?

The Channel Rebalancing Race Intensifies

The sportswear and footwear industry is witnessing a pivotal moment. On Holding AG ONON has emerged as an aggressive player in this channel transformation, signaling a strategic shift that competitors are closely watching. The company’s latest quarterly results demonstrate that while wholesale still commands the majority at 60.4% of net sales, the direct-to-consumer (DTC) channel is gaining momentum at an unprecedented pace.

In the third quarter of 2025, ONON’s DTC revenue surged 27.6% on a reported basis and 37.5% in constant-currency terms. This contrasts sharply with wholesale growth of 23.3% reported and 32.5% in constant currency. The performance gap reveals a critical inflection point: DTC now represents 39.6% of total sales, up from 38.8% a year prior. Simultaneously, wholesale’s share contracted by 80 basis points year-over-year—a subtle but significant erosion of its historical dominance.

How Competitors Are Navigating Similar Pressures

The challenge facing ONON is not unique. Deckers Outdoor Corporation DECK and Wolverine World Wide, Inc. WWW are pursuing comparable strategic rebalancing efforts, though with mixed near-term results.

Deckers, which aspires to achieve a 50-50 split between DTC and wholesale long-term, recently encountered headwinds. Its UGG brand saw wholesale climb 17.2% during the second quarter of fiscal 2026, but this partially masked a 10.4% DTC contraction. HOKA, by contrast, delivered more balanced performance with wholesale up 12.8% and DTC advancing 8%.

Wolverine has taken a more decisive stance. The Sweaty Betty brand is undergoing a U.S. operational reset centered on a premium online DTC model. Meanwhile, Saucony demonstrated solid execution with double-digit-plus e-commerce growth during Q3 2025. These moves underscore an industry-wide recognition that direct channels yield superior margins and customer lifetime value.

The Strategic Advantage of Omnichannel Integration

ONON’s success hinges on more than raw growth rates. Management emphasizes the synergies between e-commerce and owned retail locations, creating an integrated omnichannel experience. Premium flagship stores in Zurich, Tokyo, and Palo Alto serve as both revenue generators and brand showcases. This model fosters omnichannel consumers who exhibit higher loyalty and spending patterns than single-channel shoppers.

The retail expansion reinforces digital touchpoints rather than competing with them. Customers research online, visit stores for experience, and purchase through their preferred channel. This interconnectedness amplifies the lifetime value equation—a critical metric as brands compete for wallet share.

Valuation and Growth Trajectory

ONON’s market reception has been notably strong. Shares have rallied 22.6% over the past month, outpacing the broader industry’s 11.6% gain. However, this enthusiasm is reflected in valuation: the stock trades at a forward P/E of 26.95 versus the industry average of 17.20, carrying a Value Score of F.

Consensus estimates present a mixed picture. Analysts forecast full-year sales growth of 41.6%, signaling confidence in the company’s expansion. Yet earnings-per-share estimates point to a 12.7% decline, likely reflecting near-term margin pressures as DTC investments accumulate. ONON currently holds a Zacks Rank of #1 (Strong Buy), reflecting analyst optimism about the company’s strategic positioning.

The Coming Test

The real question isn’t whether ONON can grow DTC rapidly—the numbers already confirm it can. The question is whether this acceleration will be sustainable and margin-accretive enough to justify the company’s premium valuation. As competitors like Deckers and Wolverine adjust their own channel mixes, ONON faces pressure to demonstrate that its DTC expansion doesn’t merely shift sales but genuinely captures higher-margin revenue.

The next few quarters will be telling. Wholesale won’t disappear overnight, but if ONON can continue to outgrow its legacy channels through DTC while maintaining profitability, the company could establish a defensible competitive advantage in a rapidly evolving marketplace.