On Holding shares plunge 9.6% as CEO departs amid growth concerns
Co-founders take dual leadership roles after 22% revenue growth but declining profit margins raise questions
On Holding AG shares tumbled 9.6% to $35.78 on Wednesday after the Swiss sportswear maker announced the sudden departure of chief executive Martin Hoffmann, raising investor concerns about the company's ability to sustain its rapid expansion as profit margins come under pressure.
Hoffmann, who has been with On for 13 years and served as chief financial officer for eight years before assuming the CEO role five years ago, will step down on May 1. Co-founders David Allemann and Caspar Coppetti will assume joint chief executive responsibilities while retaining their roles as executive co-chairmen of the board. Hoffmann will remain as an advisor until March 2027, according to an announcement from the company.
The leadership reshuffle comes at a critical juncture for the Roger Federer-backed sneaker maker, which surpassed CHF 3 billion in annual net sales in 2025 but is facing mounting questions about its profitability trajectory. While revenue grew 22.6% year-over-year in the most recent quarter, earnings per share declined 24% over the same period, indicating that top-line growth is not translating to bottom-line expansion.
"The leadership change is part of an organizational restructuring aimed at aligning founder-led strategic intent with global execution, especially as the company prepares for its next growth phase," the company stated in its announcement.
Investors reacted negatively to the unexpected executive transition, sending the stock to its lowest level since November 2023. The shares are now trading more than 40% below their 52-week high of $61.29 and hovering just above their yearly low of $34.38. The market capitalization has contracted to approximately $12.5 billion.
The valuation concerns are reflected in On's forward price-to-earnings ratio of 25.06, which some analysts argue is rich given the company's declining earnings growth. The trailing price-to-earnings multiple stands at an even more elevated 48.91 times earnings. Despite the recent sell-off, analysts maintain a consensus target price of $57.95, suggesting potential upside of more than 60% from current levels.
The company's broader organizational changes include the appointment of Frank Sluis as the new chief financial officer, also effective May 1, and the promotion of Scott Maguire to president and chief operating officer. Co-founder Olivier Bernhard will continue focusing on performance product initiatives and athlete engagement as an executive board member.
In a significant governance shift, Hoffmann's 16.25 million Class B voting shares are proposed to be converted into 1.625 million Class A ordinary shares at the Annual General Shareholders' Meeting on May 28. The conversion would reduce his voting power, aligning with the company's move toward greater founder control.
On Holding's performance metrics reveal a mixed picture. The company reported trailing 12-month revenue of $3.01 billion with a profit margin of 6.76% and an operating margin of 11%. Return on equity stands at 13.5%, while return on assets is 9.03%. However, the quarter-over-quarter earnings decline suggests the company is investing heavily to support its growth, weighing on near-term profitability.
The stock's elevated beta of 2.15 indicates high volatility, and shares have fallen below both their 50-day moving average of $44.49 and 200-day moving average of $45.97, signaling bearish technical momentum.
Institutional investors hold 74.1% of On's outstanding shares, while insiders own 23.9%, providing relatively strong ownership alignment. However, the sudden CEO departure may test shareholder confidence as the company navigates an increasingly competitive athletic footwear and apparel market dominated by established players like Nike and Adidas.
The co-CEO structure, while not uncommon in European corporate governance, introduces execution risk as the company attempts to balance founder-led innovation with the operational discipline required to scale efficiently. Investors will be watching closely for signs of strategic clarity when the new leadership team assumes control in May.