On Holding's 22% Growth and 65.4% Gross Margin Draw Insiders as Nike Falters

Retail executives watching Nike's collapse should focus on On Holding's channel discipline. By holding back wholesale shipments to avoid retailer discounting, On accepted slower revenue but pushed gross margin to 65.4% and adjusted EBITDA margin to 19.8%. That trade-off—protecting full-price integrity ahead of a fall shoe launch—is a case study in premium brand management when overall athletic demand is soft.

Nike shares have collapsed to roughly 12-year lows as rising competition and decelerating sales erode confidence, yet even after the plunge Nike still trades at a forward price-to-earnings multiple of 23.38 — a 46 percent premium to the sector median of 15.99. That disconnect is drawing attention to a smaller rival, On Holding, whose insiders are buying aggressively after a sharp selloff. On Holding is down about 33 percent year-to-date, and on August 14 CEO Caspar Coppetti and co-founder Olivier Bernhard each purchased 65,000 shares. The insider buying came just days after On missed second-quarter revenue estimates and cut full-year sales guidance.

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By holding back wholesale shipments to avoid retailer discounting, On accepted slower revenue but pushed gross margin to 65.4% and adjusted EBITDA margin to 19.8%.

The contrast between the two companies is stark. Nike's sales have turned negative, while On reported second-quarter constant-currency revenue growth of 22 percent — though that represents a deceleration of roughly 480 basis points from the prior quarter. Wholesale growth slowed to just 12.7 percent, and management said the slowdown was deliberate, concentrated in the Americas, where the company held back shipments to retailers to avoid discounting. Rather than chase volume by pushing inventory into a weakening channel, On chose to keep shelves clean ahead of a fall product launch, protecting full-price positioning and brand integrity. That decision carried a profitability reward: gross margin rose 390 basis points year over year to 65.4 percent, and adjusted EBITDA margin expanded 160 basis points to 19.8 percent. Regionally, EMEA grew 20.5 percent at constant currency and Asia-Pacific grew 54.7 percent, indicating that the Americas wholesale pullback was a selected strategy rather than broad-based demand collapse.

For investors, the insider purchases following a guidance cut are the kind of signal that can mark a contrarian bottom, but they also need scrutiny. Executives buying after a negative revision can be a vote of confidence in the strategy and valuation, but it does not guarantee that wholesale accounts will reaccelerate or that the fall product launch will hit full-price targets. The company's rationale — that protecting retail partners from excess inventory now will position new products for sell-through at full margin — is logical but depends on consumer demand recovering enough to absorb the planned launches. On's valuation has compressed dramatically: its forward earnings multiple has fallen roughly 70 percent below its own five-year average, and its PEG ratio, which adjusts price for expected growth, sits well below the sector median. In contrast, Nike's cheap share price may be misleading because its earnings multiple remains elevated relative to peers, reflecting low profitability or high expectations that may not be justified by current sales trends.