Good afternoon. A very warm welcome to Zurich, to our home, and of course, to our innovation lab. To everyone joining in the webcast, wherever your day is right now, thank you. Thank you for investing time, and thank you for your loyalty to On.
Thank you for being with us this afternoon. Since the very first day, On has been an innovator and a disruptor. We have never stood still nor rested on our laurels, and today is no different. Encouraged by the success that we've seen over the past 16 years, and also encouraged by the rapidly growing number of fans around the world, we have formulated a bold vision for On's future, redefining what a sportswear brand can be. Here's our promise for you for this afternoon. You will leave with three things. First, you will understand the On Premium Playbook that connects everything that On does. Second, you will get the backstory on the big news of the last couple of days and this morning, news about new sports, news about new athletes, and news about capital allocation.
Third, you will see the roadmap to 2029 that turns On into the high-quality earnings compounder in our industry.
Caspar, before we start, let me take you to my kitchen 17 years ago, almost 17 years ago, and show you something. This is where the company you are invested in started. Just look at it, at these weird garden hose pieces, a shaved-off shoe, three guys crouching over a kitchen table and talking about running shoe technology. Everyone said that this market was saturated, dominated, mature. People literally thought we were crazy. Our question was, what if running could feel completely different? Not just better, different. A soft landing, a firm push-off, far less strain on the body. Could the best-performing running shoe actually also be the best-looking one, right?
We definitely believed so, David. I had also brought a spreadsheet to that kitchen. We had studied the market, and we had found something very surprising. Passionate runners were investing more into their gear, into their sport every year. They were basically willing to pay for progress. The most valuable customers in the category. However, there was no brand that catered to them exclusively. I think that was the moment where it all made sense to us. We would disrupt running with innovation, and we would only sell at the premium end. Of course, already back then, we felt that we needed a strong mission, and we all know the power of sport. What we set out to do is to ignite the human spirit through movement. We called this startup, as you know, On, and within two years, On was in 10 countries.
Within three years, we had won a first world championship title, and after six years, On took home its first Olympic medal in Rio. 11 years after that kitchen table, we rang the bell at the New York Stock Exchange. We were the first Swiss consumer brand ever to do so.
17 years later, today, we are doubling down on what has made On special throughout. Disruptive innovation and a premium playbook. What is new is everything around it, the organization, the scale, and the financial discipline to execute at a different level. What has not changed is the founder mindset. Restless. Challenge what exists, invent what comes next. The experience to dream big and take calculated risks.
Before we look ahead, allow us a moment to look back. When we went public, we made you a promise. We were going to build a much bigger company and make it more profitable at the same time. Then we set out to prove it. Today we can say we did. We never stopped dreaming, and we also learned to execute at scale without losing what made On different in the very first place. Think back to 2021. Most people saw in us a running shoe company. We, of course, saw something much broader. But granted, it was mostly still on paper. Back then, our apparel business was an emerging idea. We had just opened our first retail store in the middle of a pandemic, nonetheless. The Asia-Pacific region was an emerging business, and our foothold in elite sports was just taking shape.
Today, On is a full toe-to-hat sportswear brand. Beyond running, we have a strong business in tennis, training, trail, and outdoor, and also with kids, with young movers. On is a highly desired brand on every continent of this planet. We are closing in on 100 retail stores in the cities that matter. As you have seen just this weekend, our athletes stand on podiums almost every weekend of the year. Here is what we promised you three years ago in 2023 at our last Investor Day, the targets we would reach in 2026. For top-line sales growth, we had forecasted more than 26% compounded annual growth per year in constant currency. We now expect more than 30%, ahead of our original promise. For gross margin in 2023, we promised above 60%. This year, we expect to achieve above 65%, ahead of our promise.
For adjusted EBITDA in 2023, we promised to deliver above 18% by 2026. Now we expect it to be between 19.5% and 20% this year, again, ahead of our promise. We grew bigger and more profitable, both at the same time. Notice one thing about these numbers. It is not that we grew. Plenty of brands grow. It is that the bottom line structurally grew faster than the top line. That is the foundation for what lies ahead. Today is about the long term. Before we go into the details of our plan, we also want to acknowledge the more recent decisions we have taken that demonstrate On's commitments to our Premium Playbook and also to the discipline it takes in executing it. In the second quarter, we made a choice.
When the market became highly promotional, we could have just followed it down that path. As you know, we have never taken that path. We held back sell-in rather than build inventory in the channel that could potentially compromise On's full price integrity down the line. At the same time, our teams, together with our wholesale partners, have emphasized strong in-store storytelling to drive a very successful back-to-school campaign. With this, we have observed a meaningful uptick in sell-out momentum in U.S. wholesale versus second quarter, notably at the highest ASP and lowest promotional share of our industry. With this, as you saw in the release this morning, we are reiterating our full-year 2026 growth outlook in the low 20% range that we provided at Q2.
The midterm outlook through 2029 we are sharing today is built from that base, and Frank will share further details on the Q3 specific guidance later today.
Casper, you know this. People ask us all the time, what makes On On? What is the secret behind the success? Here is the honest answer. A single piece of On can be copied. A foam can be reverse engineered.
An athlete can sign with somebody else, right? A beautiful store can be built. What cannot be copied is how the pieces reinforce each other. We call that the On Premium Playbook, and it has five moves. One, exceptional talents and a high risk-taking culture at On deliver breakthrough innovation, Swiss engineering, and our design signature. We make premium products that stand out. Two, these products earn validation from the world's best athletes and talents performing in them. We tell the stories, and preference is earned, not bought. Three, we then wow our customers with a premium experience across our own channels and with carefully chosen partners. Four, we protect full price demand through disciplined commercial execution. This strengthened our best-in-class economics and superior margin profile. Five, we reinvest into the one thing that drives our relentless innovation mindset.
It is our world-class people and the culture we all live at On every day. Then the loop turns. Better product, stronger preference, better experience, better economics. Next innovation. 17 years of turning it. So simple in principle, demanding in practice, powerful because it compounds. Let us take you through the five moves. Move one. It begins where On has always begun, with innovation and with design. We are a young brand. We have no archive, no established way of engineering any sensation. So we had to become something else. We had to become the brand from the future.
Every time we start with a clean slate in material science, in structural engineering, in radical design, in how the shoe is actually built, and our inspiration is the athlete, and we obsess like one over that millisecond of ground contact time, over details so small that the everyday runner simply feels them, and the elite athlete knows they will win the race. So innovation leads, design makes it felt. One builds performance, the other makes it visible, desirable, and unmistakably On. Yesterday, we opened the doors of On Labs to you, and you were able to see firsthand we have a very deep innovation pipeline for years to come. So On is no longer just about CloudTec. On's foam competence centers that you saw creates formulas for new Super Foams and combines them with structural engineering. So it is chemistry and it is physics.
LightSpray now brings the performance and manufacturing of footwear to a new level across all categories. Here is where this leads right now. In running, we are rolling out the biggest innovation cycle in On's history. Not one shoe. Every major running franchise gets its next generation. The Cloudsurfer three will be first out of the gate. When we take what the running shoe learned and bring it to the street, then we create something special. Take the Cloudtilt, our technology translated into lifestyle. Today, one of the fastest-growing sneaker franchises in the industry and the precursor of much more to come. In apparel, you mentioned it. Four years ago, just an emerging idea, right? Today, our fastest-growing category. The mission from here is clear. It became very clear after our fashion show this morning as well.
Win with her, the woman who is redefining what sportswear is for her. Run, Sneaker, Apparel, three engines all born in move one. Kasper, take them into the lab.
Move two coming up. The strongest innovation in our experience happens when a new technology meets a world-class athlete. Athletes are On's most demanding customers. They are as obsessed about marginal gains as our own engineers. A technology only becomes a breakthrough on the right feet. Allow me to take you into the lab. It is September 23. The Paris Olympics are 10 months away. We had just developed LightSpray to a point where we felt it was ready to be applied to a product. LightSpray is a robot spraying an upper in one continuous filament in about 3 minutes. We had a dream. What if we could win an Olympic medal in the marathon in this technology?
Olivier and the engineers, they flew to Boulder, Colorado, with a few rough prototypes in the bag and one mission, convince running superstar Helen Obiri to build the world's fastest marathon shoe with us. You can imagine Helen had many questions. Helen had opinions, very strong views. Huge shout-out to the team. Nearly 50 iterations later, she put a pair on and finally said the words we had all been waiting for, "Now we have made the best racing shoe in the world." She then wore it in the Boston Marathon and won. In Paris, she made our dream come true and won an Olympic medal. Technology plus talent equals breakthrough. Roger co-engineering his comeback shoe, Iga winning Wimbledon in hers. Zendaya co-designing her own collection. Our sprinters, they are world championship gold winners in spikes they helped create.
And most recently, Roncevicz, the HYROX world record in shoes we have built together. You see the value of this validation in one number. Global brand awareness for On is now above 30%, and in the growth phase ahead, we are working towards more than 50%. When you see a new athlete partnering with On, we actually see an opportunity to disrupt through innovation and to grow brand awareness at the same time.
Move three, elevate the experience in how we go to market and how we manage our channels. When people want your brand, every touchpoint becomes a chance to make that desire stronger. Picture walking into one of our stores, the light, the materials, one shoe on a shelf with space around it. Someone who runs talking to you about how you run. Nothing in that room is accidental. Every detail says it's premium, and this is On. A question we get often, is that a store a loss leader, that is just dressed up as marketing? A very clear no. Our own retail is a profitable business in its own right. We are doubling it and planning for 100 additional stores by 2029 in the most important city centers across the planet.
Every one of them strengthens the brand, and every one of them is a full toe-to-head store, which is why retail and apparel grow as an ambition together. The same is true for our biggest store, our website, and the loyalty it builds through digital experience. This does not stop at our own door. Our wholesale partners are carefully chosen, and we work with them on how On is presented, and we protect our premium positioning. So that wherever you meet On, our site, our store, a partner shelf, it's the same brand, the same experience at the same level. That is exactly what makes move four possible, right?
Yes. Let's now have a look at how the On premium playbook creates strong growth and best-in-class margins. Some of you may have walked into this room with a question on your mind. Is On just a growth story, or is there more to it? Yes, there is more to it. To be very clear, we have never pursued growth for growth's sake. Growth has always been a result of the On premium playbook. What we have shown year after year is that On can outgrow the industry and expand margins at the same time. In the phase ahead, we expect to do both again, grow faster than the industry, and grow adjusted EBITDA faster than revenue. When radically innovative products are validated by the world's best athletes, people want them. When people want what you make, you earn pricing power.
The Premium Playbook ensures that our desirability is protected by a balance of demand and supply. Following a disciplined full price strategy, carefully curating our go-to-market and our channels. No volume at the expense of the brand. This leads to move five, reinvestment. The financial results overall and the margin that this discipline produces goes back into our people, our labs, our technology, and into the innovation culture that fuels it. Let me talk about this innovation culture at On. This is a culture of yes. It is a culture where possibility beats constraint, where teams allowed to dream and to act on their dreams. Really at On, we look at it this way. Failure is not trying and falling short. Failure is never taking the shot. This is where Olivier, David, and myself, we still make the biggest difference today.
When the boldest ideas show up, we are there, and we are the ones who say yes. That together is the On Premium Playbook. In 2023, in economic terms, we call the outcome of it durable growth, you remember. As we now set out to redefine what a sportswear brand can be going forward, we will aim for what we call premium growth. Through 2029, On aims to become a high-quality earnings compounder.
Now why is the opportunity ahead bigger than On? Quick question, who in this room has already moved today? A run along the lake, the gym, a long walk to get here? Some of you are jet lagged, so I give you 24 hours. Who has moved? Hands up.
No pressure.
Look around you. That is the shift. Sport has moved to the center of our lives. Movement is no longer a weakened activity. It is an identity every day of the week. We call this group, and of course, now you as well, with your hands up, the movement class, a generation that treats health, vitality, and longevity as the new premium status symbol. We are not the only ones seeing it. McKinsey surveyed 9,000 consumers across the U.S., the U.K., Germany, and China last year. McKinsey's words, "Wellness has become a daily practice, not an occasional purchase." The largest cohort in that market is a quarter of consumers with more than 40% of the spending. Their number one buying criterion, not price. Quality. Now look at your wrist and even fingers. Sport watches, rings, devices. A $60 billion market built just in the last 10 years.
It spans every age bracket, and it is looking for performance brand that deliver premium innovation and design. Rings a bell, right? As you know, multibillion-dollar brands have been built exactly at that intersection. The intersection that is at the heart of On's playbook. The vacuum cleaner that performs like a jet engine and actually looks like one and sells at five times the category price, or the computer that became a personal identity device in your pocket and on your ear. Beautiful shell, innovation inside, premium price. Unlike the scarcity playbook of luxury fashion, which by definition is scarce, On's premium innovation playbook opens a far bigger market. That market is our opportunity. Caspar, how big?
How big is the opportunity? We believe it is big, and it is getting more interesting. Global sportswear generally is about CHF 350 billion, and it grows at 3% per year. The premium segment of that market sits at CHF 125 billion today and is growing more than twice as fast. We expect it to continue to grow faster. By some estimates, premium apparel alone will be a CHF 71 billion market by 2030. But be not mistaken, this market is not lifting every boat. It favors performance, and it favors premium brands that stand for something specific. The premium consumer is looking for somewhere credible to go, and that consumer is also redefining premium. Less about what you own, more about how you live. Spending on experiences, so travel, events, recreation, has outpaced spending on goods for a decade. We feel that in our own numbers.
Our average footwear price has moved from $145- $170 in just five years, with demand growing. Meanwhile, the luxury brands have priced out some 80 million aspirational customers in the past two years. We are asking, where does that aspiration go? We believe it will go into well-being, experience, identity, and into premium sportswear. Three things become very obvious here. One, our addressable market is sizable, and it is growing. Two, On is growing considerably faster than the premium segment of the sportswear market. Three, On is uniquely positioned to capture this growth. When you ask about our addressable market, we define it by the movement class and everything they wear to move through their life. That is our market, and we are ready for it. Today, we will present to you how we will capture the growth in our addressable market across product, brand, and channels.
Very simply put, in performance, we will lead with running. In lifestyle, we will lead with sneaker. In apparel, we will lead with her. The movement class reaches far beyond the sports we play in today, and it would be easy to chase every category. We don't. Every new sport has to come through the playbook. Look at the sequence of our last 17 years. Running, then all-day footwear, outdoor and trail, tennis, training, young movers. None chosen because the category was big. Each chosen because we could bring something unique to that sport, to the sport that that sport did not have, and because it made On more relevant in the world and for a bigger community. Three conditions. Can we disrupt it with our innovation and Swiss engineering? Does it build cultural relevance beyond performance and widen our market? Is it ready to be premiumized?
Tennis actually passes all three. Six years in, tennis boasts our highest customer lifetime value, a 61% net sales CAGR since 2021, and millions of people who found On who had never previously known us when we were mainly a running brand. The next chapter follows the same rule. Four days ago, we told the world On enters football. Here is what happened next. Eight billion earned media reach. Sorry, I was a little bit exaggerating. Eight billion earned media reach, the most seen story in On's history. In Mexico, 312 times our baseline reach. In China, 344 times our baseline reach. 50.5% share of voice in all football-related media mentions. 72% of new followers we attracted since the announcement are under the age of 35, and in organic social media, over 4,000 times the engagement than our comparable average.
This is what football does to a brand's relevance before we have sold a single boot. This morning, you stood on real grass in a tent, saw the first pieces of our football world, and heard Thierry Henry and Kylian. Both incredible icons and legends. I am not here to announce football. I am here to tell you what it does to this company. I am talking about global football, not the other one. 140 million watched the Super Bowl, 1.5 billion watched the World Cup Final. A footwear market of roughly $29 billion, heading for 38 by 2030, growing fastest in Asia-Pacific and in the women's game. Again, we are not entering because the market is big. We are entering because at the premium end of this sport, there is still space open. Radical innovation on the pitch, extending to the pavement and the runway.
A few incumbents own the architecture of the category. They compete head-to-head. We will play a different game. Here is how we know we can build a sport, not just sign one. Look at tennis
Roger didn't become just an ambassador, he became a partner, an owner, a co-creator. Around him, we built the generation, right? Iga, Ben, Joao, Flavio. This is how On builds a sport. Football starts in the same way. Thierry Henry, one of the greatest ever to play the game, is our director of football, helping us since 2025 on our strategic entry, and you heard him this morning. Kylian Mbappé, the defining player of his generation, fresh off the World Cup Golden Boot. Sydney Schertenleib, Switzerland's finest, the first of a women's roster you will hear much more about very soon. So, a builder, a legend in the making, and the next generation. Caspar, with Sydney, Kylian, and Thierry on our side, right? We carve our own path.
Absolutely. You want to hear why we can? Our innovation engine, and you have seen the LightSpray product this morning, has given us an entry ticket nobody else holds. I'm quoting Sydney here, "I have never felt the ball like this before," is what she said after her very first practice in an early concept of our upcoming performance football boot that you have seen this morning. This is the disruptive power of LightSpray. On a football boot, LightSpray does something no boot has done. It puts almost nothing between the foot and the ball. As always, innovation is really at the core of our playbook. As we've just heard, football produces the most watched human beings on the planet. They're heroes on the pitch, but they're cultural icons of it. Again, the On Premium Playbook in action, combining innovative product with validation in the elite performance space.
That then needs to translate, and will translate into cultural relevance. Now, picture football in our own stores and on our online channels. What it can do to our relevance with wholesale partners and to consumers that meet On for the very first time, and they meet us in a new arena. Football instantly increases On's awareness and relevance in many corners of the world. In South America, Africa, in Southeast Asia, regions where the sports is not a category, but culture. Some would even say it's a religion. We're excited about football, and you will see more and more momentum building over the next months, and a true market entry over the course of 2027. Now, from the football pitch to the golf course. Which, looking around this room and the reactions we had this morning, means the world to quite a few of you.
Roger, of course, let the cat out of the bag this morning. So let me repeat. In the first half of 2027, On enters golf toe to head. It is no secret that many golfers already playing On. You might want to know, is that a coincidence? Or is it maybe that our Chief Design Officer, Thilo, is a golf fanatic? That our President and COO, Scott Maguire, who you'll hear in a second, grew up in St. Andrews, the home of golf. Or that our partner, Roger, now plays rather more golf than tennis. In any case, here is the business case. Golf is the most premium mass sport in the world. Roughly 150 million players, over CHF 5 billion annual spend in golf gear, and a consumer who spends more per head than in any other sport that we play in. It has changed since post-COVID.
A younger, more diverse, and style-conscious player is now coming onto the course. This is On's consumer. Let's run you through the three criteria that David outlined, the three criteria of the On Premium Playbook that define whether we can enter a new sport or not. First, can we disrupt with innovation? Yes. Golf footwear has barely moved in a decade. Is there cultural relevance beyond performance? Of course. Golf is fashion, travel, and status in one. Third, do you think golf is ready for premium? Golf was born premium. Football and golf, the same ambition. Bring the playbook into new arenas with products that perform at the highest level and experiences that connect course, stadium, and street. How do we capture this opportunity? The Movement Class, running, sneaker, apparel, as the immediate growth engines. Training, tennis, football, golf to build for the future.
There's ample room ahead of us to run the playbook. The rest of today is about how. How we operate it, how we run this business. Let me start with us. Throughout On's history, the founders have set the strategy, taken the operating decisions that matter, and driven the major growth engines ourselves. That has not changed. It is why we are standing here as CEOs, and why Olivier, as founder and professional athlete, remains absolutely instrumental at the very heart of On in innovation.
But a playbook at this scale needs a leadership bench, and ours is very, very deep. You have met many of them today. You will hear from more this afternoon. One of them is responsible for turning the playbook into daily execution across the whole company, our President and COO, Scott Maguire. Scott joined us 18 months ago after helping scale some of the world's leading premium innovation brands. Again, rings a bell, right? His job is to keep strategy, innovation, product, brand, and commercial execution connected and to keep us fast and disciplined as we grow. Scott, please join us here on stage.
Thank you, David, and thank you, Caspar. The bigger a company gets, you all know, the easier it is to get slower, to get more complex, to get more siloed, and to be much more interested in itself than its consumer. My job is to ensure that On does the opposite. We've been changing our operating model under one principle: start with the consumer and work backwards across every function, across the whole journey, from the idea in the lab to the moment someone picks up a box in the store. It's not just a concept. Let me bring it to life with an example of how David, Caspar, and I work every day. I've spoken to some of you about this today already, but last year, Caspar and I flew to the U.S. We spent a whole day in a run specialty store.
We watched as people came in. They picked up our shoes and then put them down. Some chose On, and some chose others. We went super deep on why. Some of the answers were in the product, some were in the storytelling, some were in the channel, even some was the information on the side of the shoebox. The store staff couldn't quickly work out what product they were pulling. We were losing out exactly when it mattered. We immediately got on the flight back to Zurich, we put every function around that one day in that one store. The result, a product built in record time with an engineering breakthrough we've been chasing for years, the combination of Super Foam and CloudTec together, the structural engineering of CloudTec.
We had a whole new color palette for that market, a new way of explaining our technology, a totally different channel plan for that launch, of course, even a new label on the box. The Cloudsurfer three launches next month. Early feedback from running media has been exceptional. That is what a consumer-led cross-functional organization does. It turns insight into action quickly across the whole company. It's how we're running all of the 2029 strategic plans, it's how we'll scale faster without losing the Premium Playbook discipline. Every decision for us comes back to two questions. Does this make On more relevant to the consumer, does it strengthen the economics? Caspar?
Thank you, Scott. Yes, now let's look at the economics. Let's look at what On's Premium Playbook aims to deliver for shareholders in the next three years. By 2029, our goal is to add more than CHF 2.1 billion to our net sales. This will turn On into a roughly $7 billion U.S. global sportswear brand at current spot rates. At the same time, we aim to maintain our premium profitability profile with a gross margin of above 65%. The combination of disciplined investments and leveraging economies of scale will enable us to grow the bottom line faster than the top line in order to achieve adjusted EBITDA margins of at least 22%. Our goal is to make sure that the bottom line grows faster than the top line. We anticipate an adjusted EBITDA CAGR of above 20%.
This whole team is laser-focused on delivering the plan for 2029, but we'll continue to apply the On Premium Playbook with a lot of discipline. The playbook has delivered. It has delivered unparalleled results in the last period, we will keep executing it play by play in the future.
This year, the team at On expects to deliver a business of roughly CHF 3.5 billion. With the growth engines you will see this afternoon, we have strong conviction in our premium growth path, which brings us to the question of how we use our excess capital. You may have read this morning that we are announcing a $1 billion share buyback framework over three years. Our first priority for allocating capital has not changed: reinvest into the business where the long-term return is highest. You heard it, innovation, product, brand, markets, and capabilities. Our success now generates more capital than our strategy and Premium Playbook requires. Like you, we are shareholders, and capital the strategy doesn't need belongs to you and to all shareholders. That is the whole logic, not a substitute for growth, but an outcome of the premium business model.
17 years ago, three people sat at the kitchen table. That company is now a high-quality earnings compounder and is returning up to $1 billion to its shareholders. That is what premium growth means. Remember this? 17 years ago, three people believed in this shoe. Today, millions of people in more than 90 countries believe in On. Some of them are in this building right now, and you will meet them this afternoon. Everything you have seen today, every product, every category, every store is this shoe turned through the playbook again and again, not by three founders, but by a world-class team that has made the playbook its own. If you take three things from this stage, take this: one, we've done it before. three promises made, three promises not just kept, but actually beaten.
Two, the consumer, the Movement Class is moving toward us, and this Movement Class is real. It is global, and it is just getting started. Three, we have the people. An innovation culture where yes is the default, where the boldest idea gets the shot, and a leadership team that turns it into results quarter after quarter. Caspar, Olivier, and I are here to protect that culture. It no longer depends on us. That is the point. On has come a long way from that kitchen. Everyone in this company, founders very much included, is more excited about what is ahead than anything behind us. The brand from the future, the On Premium Playbook. Simple in principle, demanding in practice, powerful because it compounds. Dream On.
Thank you. Thank you for listening to our dream and to the plan. This afternoon, it's also the proof, and it belongs to the people who built the dream together with us. Scott, why don't you show us what's ahead for the rest of the afternoon?
You have just heard the playbook from those that wrote it. This afternoon, you are going to hear it from the people who run it and strengthen it every day. Each session connects and brings the playbook to life. First, we are going to hear from Katarina Berg on people and culture, our most important asset and the reason we really believe we are going to deliver this plan and the Premium Playbook. Then innovation and design. How science-driven innovation and our design language create differentiating product and pricing power. Then community and brand. How we turn what makes On distinctive into cultural relevance, and relevance into demand. Then GTM and channels. How we connect people with On through a premium experience while growing with discipline. Then finally, Frank Sluis will show you the financial outcome, the real result of all this work. For these sessions, we have one ask.
Do not hear them as separate strategies. They are deeply connected and integrated to one another. You will see a focus on the three immediate growth engines, and they are running through all of them. Remember, performance led by Run, lifestyle led by Sneaker, and apparel led by Her. This is where the economics of the next three years will be made. The new sports, the categories we just announced, will help us build the growth for decades. With that, Katarina, please.
Thank you. Thank you Caspar, David, and Scott. My name is Katarina Berg. I might pronounce it different because I am not Scottish. I head up everything talent here at On. I am going to talk a bit about something that I am super passionate about. It might not be strange with my role if you think about that this is what I have been doing for the last 30 years. I know I am in a room with a lot of people that is good at math and numbers, so you already figured out that I started when I was 12. What is unique with this company is that it is not just the person that heads up HR that is passionate about people and culture.
You just heard the founders and Scott, but the whole executive team are very dedicated, and they believe in culture as something that will set us apart.
That uniqueness is what we build and what makes us drive and find the talent for the future on an ongoing basis. That is also what brought me here. It is more than a year since I joined this company. I worked for some ethical brands and all of them said that culture was important, but none of them put people and culture first at their investment days. This mission of ours is the reason why I came. This is the reason why most of our people come to work every day. It is something that we strive, something that really talks to us. You heard David and Caspar say and also allude to some of the most, or globally, researchers in the world. Everybody is interested in movement, everybody is interested in longevity, and everybody is interested in health.
This is why this is important and this is why people are engaged. At the moment, On is 4,880 people. We speak more than 110 languages, and we are in 33 locations and growing. In a fairly fast pace, we've been growing. That means also if culture is important to you have to make sure that you have a structured way to grow. That you are very deliberate of what you do, and that everything that you do means something. You can even say that you can summarize our whole existence with the four Ps. The people in the organization, the product, obviously, with a company like this. The planet and our promise to the planet, but also profitability. You can't do really anything with the last three Ps if you don't double down on your people.
It's not going to move, it's not going to change, it's not going to evolve, and therefore people and culture is truly very important to us. Everybody that works at this company are relentlessly obsessed with excellence. That is how we drive the Premium Playbook for us. We also, I think, going back, thinking about what it was when I joined here, that really struck me as very unique. It's a very humble culture, but we're never done. It's unapologetically resourceful in everything that we do and everything that we strive to achieve. We dare to think differently, act differently, and do things our way. You heard Caspar and David say that one of the most important things that they do on a daily basis is to say, "Yes." It is true.
I dare to say that everybody that comes to work at On may frame it slightly different. They might say, "What if?" and "Why not?" It's the same thing as, "Yes, we can." We dare to think different, we dare to act different, and therefore, there's a constant movement. Change is the only concept that we have, and it's all about raising the bar for all of us. Bold culture doesn't happen by a reason. They are defended, but first they are designed. You can either be a passive driver to your culture or you can lean in. You can also understand that this could be what really sets you apart. Standing still is not necessarily an option for us.
I think you by now, since you've known us for a long time and you've been loyal, you understand that this is part of where we're going. By design, we are made to move forward. I think the progress and everything that we build, how we attract people, how we grow people, how we engage people, and also how we retain people is very much the answer of what we do. Culture is a part of our core business. The way that we do things, the way we choose, and we also think it is the advantage. If you ask our organization and our people, which we do on a yearly basis, 87% states that they know that they contribute to On. They're proud to work here, and all of you know proud people perform. Culture of innovation.
You are going to hear that word many times this afternoon. It is exactly what is unmistakably us. Culture of innovation. If you think about it, what does that then mean? It is very much still, for all of us, an entrepreneurial mindset. Yes, we can. It is also about speed and execution. You heard Scott give many examples of that. It is innovations everywhere. It is not just in the product lab. It does not matter if you are part of the legal team, if you are part of the finance team. Can we do things in a different way, and what is the unique way to do it here? It goes right through cross-functional in everything that we do. Innovation also is part of the attraction. A good idea is a good idea, whoever comes with it.
That is also the reason why, as we grow, and you know most companies do not get faster when they grow. They actually go slower. That is not true here. You also know that to make simple easy, it is getting harder and harder the more complex you get. Our people say that they find us to move faster and faster. Again, innovation. How do you make sure after year, after year, after year, that you keep innovating? We see, no matter of size, that we keep doing that in a good and fast way. This translates into the super exciting innovation like you heard it before, LightSpray. CleanCloud and Cycling, just to mention a couple of examples. It also is how we bring and design apparel into the market.
Obviously, it would be very, very remiss on me if I do not say how we also bring the beautiful sport of football into the world. I think that cross-functional way of doing it in a very fast, almost crunch hour, crunch week, crunch year of doing things that most people might have thought that that could be the next play, but do it in that way precisely, and also communicate, market, everything again from legal to all the functions that needs to play part. I think that is where we are very different. To show you a couple of data points to you. 87% of all our people leaders feel encouraged to innovate and have the autonomy to do so together with their teams. Think about it. It is close to 90%, and that number, as I said before, has actually become higher and higher.
We are not happy there. That would not be us. We are trying to make that something that is constant. This demonstrates also that we are able to do so. 86% of our people leaders respond favorably when they say that they can do this, and they feel that they are encouraged. Also, that they have the autonomy, the freedom, and the flexibility to add something and have impact. We know in all the research that we see around the world that most companies are struggling with exactly this. So when we compare ourselves, yes, we are in a good position. We are doing a lot of things right. That means that we need to lean in, and we need to make sure, and as leaders, we also need to remove those blockers. Growth is our baseline. When our people grow, we grow.
When our people doing well, we do well too. Easy to say, harder to do. But growth is really embedded in our DNA. It is connected to everything we do on a daily basis, but it is also rooted in that we are a purpose-driven company. We have that North Star. We have that beacon, and people do know what our vision and mission is. As we usually say, when the why is clear, the how is easy. Therefore, it is also a strength of ours that everybody understands what we are doing, where we are going, when we are going, and how we are doing it. A couple of hero events that will help us as we grow, as we become more complex, we are more parts of the world, and we are in every time zone of the world.
One of those things is something we call Ignition Day. We fly every person that comes to and joins this company, no matter what their role is, no matter what their function is, no matter where they are based. They come to Zurich, they come to the mothership where you are now, to hear the founder stories, to meet most of the executive team, to understand what makes us uniquely us, to also find a way so they can navigate and contribute much faster than they would not otherwise. 93% of everybody that has been to Ignition Day said it helped them achieve and perform much faster to understand who we are and also what their role is. They also found and met other colleagues that would help them do their job much faster.
Another of these hero events was that we do understand that our leaders, our people leaders or our manager, if you will, are very important. They could either be blockers or they could be the coaches, the mentors, and the people that push back that also enables, but in the long run, also make sure that we grow the next generation of leaders. We created and we designed a leadership program on the principles that we have so people are set up for success today and tomorrow, but also that we continue to foster that culture of innovation. We are now in our ninth cohort.
Again, it is a 9.2 out of 10 scale of do you now think that it is easier for you to, again, foster, develop, coach, but also push and challenge the people that report into you so we can do what we are set out to do here, which is not a small feat. We are launching a new Oniverse. Most of you would maybe think, oh, is that another internet? If you think about it, especially if you have different types of skills, different types of roles, you are everywhere in the world. For us to have a tool where we can communicate, we can inform from the same person or from the same message at the same time to everybody, no matter if you work in an office or you work in a store, is quite powerful.
All these things are there, just to mention a couple, to make sure that everybody's more or less culture vaccinated because we think we are onto something special. These are the things that we also all the time pressure test, so it's not a chosen truth of what's working here. Then we keep them forever because our culture obviously have to evolve. Our people is our culture and our culture is our people. It needs to evolve for different reasons. But one, because the people that's been here for a long time, they have to understand that they matter. The people that join also have to understand that they also matter. Together we are creating and we are set off on a journey that is super important to us.
The commitment that we have to all the people that join and the expectations we have on them is a couple of things. One, what helps guides us is these five spirits. In most other companies, you would call them values. They've been with us for a long time. They served us really well. The thing that really sets us apart is this. In most companies, you ask, do you know what the values are? Maybe it scores okay. Here, it scores over 90%. You could go, okay. We ask them, do you live by the values? Do you embody the brand? Again, it scores super high. What is different at this company compared to other companies is, do you also think that other people in other functions, in other roles, live our values? Everybody again says they truly believe so.
This is the values or the spirits, as we call them, that is here to guide us, make us make decisions, but also how we show up, how we treat each other, and the playbook of On. Growing our people is a commitment that we have. We dare to be trust-based. We dare to be value-driven. But growth is very important. I said earlier, when people grow, the company grows. So that is a promise, but also something we expect from our people. They need to lean in. They need to stretch. They need to make sure that they grow with us. We need to make sure that succession planning is on point. We need to make sure that we stay a high-performing team. Very much back to the athlete spirit.
How can we all the time make sure that we find new ways of doing things in a different way and not changing for the sake of changing, but just to improve? We all also know that it's much more fun to learn new things. If you believe in a growth mindset, and we do, then it is super important that you find ways to evolve, push, but also develop and grow your people. All of these things makes On a destination employer. What we have seen, which makes us both happy and proud, is lately we have had the reason and opportunity to add a couple of tenfold hires. It's been easy for us to attract people that has not necessarily had the same experience and skill set that we needed before.
And these people can choose any employer, any brand in the world, and they can also live in most parts of the world, and we still come out on top, which is a strong signal to our brand, our attraction, and our employee brand. So if culture is our kind of original innovation lab, and when we dream together, we dream big together and we grow and we become something else together. Everything that I have described in this session is an innovation mindset. You heard before, being complacent is not necessarily a choice here. Doing it the same way over and over again, it's not necessarily us. The cultural growth and the investment in our people is kind of a service to something larger. On has always been a company with a sense and very clear sense of purpose.
As we become bigger and bigger and bigger company, we need to master how to scale. And some of us have done that before. It's not necessarily easy, but having that strong and very relevant evolving culture will help us do that. Our premium standard completes this logic. Our culture extends to how we treat our people. It extends to how we engage our communities. It also is kind of a fact that we refuse to compromise. Again, unapologetically us. The same discipline that goes into building product goes into building teams, building functions, building our culture, building this company.
I'm just going to end off with saying that what you have heard and seen this morning, and while you hear my colleagues come up here and give you examples of what we're doing, I think it's very hard not to be very excited about what's next and also what the future holds. And with that, I would love to invite up on stage my dear colleagues, Thilo, Olivier, and also Scott to talk about innovation and design. Thank you.
Hello, hello. Thank you, Katarina. I couldn't agree more, right? You probably don't know so much, but there's still some people in the audience. I love people and culture is everything to me. And the beauty of it that both enable actually innovation and innovation is not just innovation. Innovation is an important mindset at On. And I'm not here on stage by myself. Over the next 30 minutes or so, we're going to talk about innovation, product and design as well. And hey, the good news is my presence on stage is eight minutes. Now it's 9:30, 12 in the U.S. The market opens in 18 minutes. You don't have to make any notes for my presentation. Can I ask you to close the laptops for eight minutes only for me? I think there's information you want to take notes from Scott, so please feel happy to. eight minutes.
Be with me. I need your eye contact. I do not know how you feel, but looking at the industry lately, I sometimes get the feeling that many of the legacy brands, they view innovation as a single annual event tied to a product circle. At On, that is not the case. You have heard it a couple of times, even yesterday at the Makerspace. It is a relentless, continuous loop across many multiple teams. It is how we formulate a new foam, it is how we sequence a textile, but also how we re-engineer our supply chain. With us, innovation, it is not a corporate initiative. I said it before, it is a mindset. It is also to innovate means it is also a mindset to fail. We celebrate failure. If you do not fail, you are not trying hard enough.
I am sure you have heard us saying dream on and also that is not a marketing tagline. It is an engineering protocol. Start with athlete's intuition. Create in our makerspace with our engineers, then we go validate in our labs with our biomechanics. Test to failure. We want the product to fail at some point in our labs and out in the fields alike. That loop goes on, and on, and on. What we have learned from that protocol is pretty easy. It does not make sense for a breakthrough, it does not make sense to try to improve the product by only 5%. Real breakthroughs, they come from questioning the core assumptions the industry is built on. To make those breakthroughs a success every time, I circle back to Katarina Berg. We need people. We need the right people, and we need a lot of people.
Over the past years, we brought 400 specialized designers, engineers, and sport scientists right here to Zurich to let those disciplines collide, and sometimes, I tell you, it is literally collide. To exactly understand where this obsession for innovation comes from and how this entire engine scales today, I want to take you back where it all started. Probably some of you know I have been a professional athlete. It was in 2009, again, when I was retired for a couple of years, I realized that, well, I knew that the competitive years were over, but my drive for running was still there. So I kept searching for a running sensation that simply did not exist in the market. At that time, if you circle back, probably you will recall, the market forced a permanent trade-off. You either could take heavily cushioned, soft, or thin, hard, and fast.
Basically, you had to choose between running on mattresses or on concrete bricks. Me? Of course, I wanted both. A soft, protected landing paired with a firm, explosive push-off to drive forward. But I guess just lately you have seen some Instagram posts, I have tried to pitch that concept to legacy brands. They looked at me. You should have seen their faces. They looked at me like I was crazy and told me the physics were not possible. The trade-off was fixed. Not a good idea. Never tell an athlete something is impossible. I will go fix it. So we went into my garage in the tiny village I grew up. By the way, I still live, much to my neighbors' ongoing concern, by the way. But after tinkering with a few questionable ideas, we took a pair of scissors, I mean, you see it here, right?
To a garden hose, glued it on a shoe. I know exactly what you're thinking now, and yes, you're totally right. Most billion-dollar companies start with sophisticated pitch decks or Silicon Valley incubators. Us? We started with garden equipment, a scissor, and some glue. To be very honest, initially, I mean, come on. Would one of you go out running in these kind of shoes? Probably not, right? I had a hard time because, hey, it looked uglier than this prototype. It was even higher stacked. It was ridiculously heavy. On top of it, hey, I had a reputation to protect. I was still an athlete, right? But only a few steps in, I knew I was onto something. I've never felt that feeling before. I've gone around the planet a couple of times in my life. But 10 minutes in, things changed.
The friction that you get from running probably melted the glue, and pieces of the garden hose went flying off left and right into the bushes like small rubber missiles. Oh, boy. The neighbors definitely thought I've lost it. But for those first 10 minutes, the compromise was completely gone. I didn't have to choose between soft and hard, slow and fast. It was all there. That moment, that particular moment, that was the moment the spark got On. I felt compelled to create a running shoe, not for professional athletes, for anyone, for the people. Of course, I had no idea where to begin. That hands-on, curious, and slightly chaotic spirit was born in my garage, and it remains the unfair advantage till today. Still, to confirm I wasn't hallucinating, I wanted to take the raw concept to some experienced biomechanics.
I talked to people at the ETH, which is super close to here up the hill. The ETH, by the way, is the Swiss Federal Institute of Technology. We mapped how hollow structures could collapse vertically to absorb impact, then instantly lock to form a rigid platform to propel propulsion. Yesterday, you had the chance to walk our Zurich maker space and saw where Thor was the guy that presented. That facility still today is the link to the spirit of innovation in my garage back almost 20 years now. The main difference, and it's really the main difference, the spirit hasn't moved. It's the main difference. We have state-of-the-art machinery and hopefully less of those fragments flying off nowadays. What we have learned since is also pretty simple. True innovation begins with a genuine idea, with bold decisions, raw materials, and very important, rapid prototyping.
We don't spend six months exchanging digital renders across the ocean. We focus on innovation, and it all happens right here in Zurich. Look, it's that simple. If a designer has a crazy idea over morning coffee, they don't create a PowerPoint presentation. They don't even ask for permission. What they do, they simply walk around down to the maker space. They cut up a shoe, fine-tune a midsole, mold a plate, and have an athlete generating data on a treadmill all before lunch. That compromise of time to prototype is how a crazy idea with a garden hose became a movement, a global movement. It's how we will continue to scale radical innovation across the globe. To show you now how innovation translates directly into commercial margin and category growth, I hand over to Scott, our President and COO. Scott.
Thank you, Olivier. Thank you. Last night, you walked through our labs. You saw firsthand how deep our teams go. We are here to connect the dots on why this engineering depth builds competitive advantage. We have scaled what Olivier built over 17 years ago into a world-class innovation engine. We believe that even our recent unparalleled growth in lifestyle, remember David talked about it, is authentically earned because of our technical performance credibility. This link is so incredibly important for us, and it is the reason that our whole strategy, everything that you are hearing today, deeply invests in performance innovation. It does not just fuel our performance business. We truly believe it fuels our lifestyle business as well. We built a portfolio of over 650 patents to translate this immense engineering output into an unmatched business model. We think in three pillars.
Science to technology, CloudTec and Swiss engineering, LightSpray. Let me talk about pillar one, science to technology. Olivier alluded to it. To own human movement, which is what the teams you have seen yesterday strive for every day, we start with a deep scientific understanding of biomechanics. Insights from this measurement are the absolute catalyst to invent all of our new technologies. Let me make it real with an example. Caspar talked about Hellen Obiri. Hellen Obiri comes to us, this is a real story, and says her legs feel like lead in the last 10K of a marathon. We go deep into the biomechanics, and with independent studies into a new research phenomenon in running called leg stiffness, we go really, really deep into understanding that.
We use that insight to invent a whole brand new CloudTec Sphere, that optimizes leg stiffness, and then we build the latest racing product that you have seen that we launched two months ago. Not only does that same study show a huge jump in running economy, our elite marathon athletes, of course, including Helen, all go on to smash their PBs as soon as they put that shoe on. This approach is now what we have taken across all of our categories, from running, tennis, apparel, and now football and golf. That is science to technology. The second pillar is CloudTec and Swiss engineering. What does all that mean? When people think of On, they think of the shoe brand with the holes. That is what people know as CloudTec. For us, CloudTec is something very, very different and much more technical. We see it as structural engineering.
Most brands can buy super foams off the shelf, and then that is the midsole of the shoe done. Very few have the engineering capability to structure the foam based on the sensations we want from the biomechanical insights we just talked about. No other brand can blend their own super foams in their lab on their R&D site and combine that with CloudTec. Nearly half of our patent portfolio are different CloudTec innovations. They are not just hopes. This is what gives On shoes their unique sensation and differentiation. High-performance engineering comes with an equal responsibility on our planet. Katarina talked about it, one of the Ps. Our goal is to prove that high performance and environmental impact do not have to be in conflict, and this brings me to CleanCloud, another huge innovation from On. Almost every running midsole today is made from petroleum-based EVA foam.
In 2019, we asked the ambitious question. In fact, as usual, Olivier asked the ambitious question. What if we could take carbon industrial emissions and capture it and turn it into high-performance foam? We did it, and we announced CleanCloud in 2022. The chemical industry told us it would not be able to scale until 2030. We didn't wait. We built a global supply chain from scratch, converting captured CO2 into e-naphtha and high-performance EVA pellets. More importantly, we made zero compromises on performance for lower carbon impact. Even more importantly than that, we do this while staying incredibly disciplined in our economics. When you add this proprietary material innovation, structural engineering, along with extensive durability, acoustic testing for squeaking, premium material selection, highest manufacturing standards, you see it on the side of our shoes.
All this together is what we mean by Swiss engineering in the On context. It's a lot. It all comes together in one phrase. A beautiful lock-up as well from Thilo. Pillar three, LightSpray. LightSpray is not just an automated manufacturing breakthrough. It's one of the lightest and most sustainable upper technologies on the planet today. When we combine our latest cloud technologies gives step change performance improvements, LightSpray just adds on top of that. We have obviously designed the LightSpray shoes, but what most of you do not know is we also designed the robots that make it because we had to. We hold over 250 patents already across the product and process, and we're so excited how fast it's scaling production. It's scaling fast because we see LightSpray technology already translating into some of our lifestyle products.
We're starting to pilot that, and that is the unlock to scale this technology. We've got a lot of work to do, but we see incredibly great initial signs. It's the fastest evolving technology at On, and we predict it will be 10% of our footwear business. It's not about the volume that's important, and that's not the reason I love LightSpray. The reason I love LightSpray is what it does to technology, the paradigm shift in global supply chains. The real reason I love LightSpray is what it represents about us. We can take the most ambitious challenge. We can make it real, even if no manufacturing process exists today, and break through where many others before us have tried and failed. When you combine these three pillars of technology, all of that innovation with our design philosophy, that is what drives On's pricing power.
I'll say it again. When you combine all of that technology with our very distinct design language, that's what drives our pricing power. I would like to introduce Thilo, our Chief Design Officer, who will take you through how we bring the emotion to all of that tech. Thilo.
Thank you, Scott. I had a lot of fun this morning. Did you? Good. I am glad. You saw a lot of applied design this morning already on finished products. We are going to take it a bit on the design meta level, and I especially welcome again the people I met three years ago. Design is consistent. It is super important to really build up on a story. What is the function of design at On? It is here to show you how innovation feels, and that is an equation I really love. As David said earlier, engineering solves a functional requirement, and design makes this solution desirable. I like this so much because there is so much in it. In the word engineering, you have innovation. You have credibility. How a product feels physically. In the word design, you have expression.
How a product and therefore a brand feels emotionally. What in other places might be a reason for a lot of friction internally because people would want to build either a performance or an expression brand. We see this, as I call it, semantic ambiguity, as the main contributor to our unique design proposition that we have built now for one and a half decades. I say it for the first time. I will repeat a few times. We design for the and, not the or. Why is this so? I think there are ingredients that play a role, and one of them is our provenance. You see the famous Zurich University of the Arts that made the Swiss style that became international style big in the '50s of last century.
The foundation of this is really the rigor and the clarity and the purity with which design was done in Switzerland. With design, it is no different than with engineering. Precision is king, and it runs very deep in the DNA. Next to Swiss rigor, I think there is as well a thing that we love to entitle as modern craft. Modern craft is as important as conceptualizing and think about design. You have to be able to go and build it. You touched a word on it. Currently, the more people spend time on AI-enhanced digital landscapes, the more I ask people to just go to the workshop and quickly try and do it. I truly think if you both do in parallel, that is really a superpower. The third ingredient that we love to work with or even define is the design vocabularies.
I think a traditional design vocabulary is useful, but it is not what keeps us hungry. While we keep an eye on the competition, I would say it was never the main source for our inspiration. While we respect the past of Swiss design, we are the brand of the future, and the languages, the aesthetic expression that we push is the principle we call or that you know as well from a different context, MAYA, Most Advanced Yet Acceptable. I think we have never been afraid creating something new that has not been out there. I think one of the biggest motivations of the design team is to create our own visual and tactile vocabularies for the movement. The tools that we work with currently, they deserve as well a mention. What you see on the left appearing on the big screen, this was the reality.
That's what a sketch looked like, a first sketch that we presented at the so-called initial design review, which was the first design review in a series of several, one in nine months or a year. What you see on the right is the images that we now bring along to a first initial design review. This is not photography, this is AI-enhanced from what we sketch and we line draw in a very, very few days. We're not only producing pack shots, we're producing editorial images on body. We even animate it and in cooperation with marketing and comms, we can imagine campaigns. I'd rather tell you why we do this, not only about the advancements that we did.
Design administration is somewhat the enemy of the beautiful design mind because drawing plans, filling in material sheets, hundreds of color specs, this all takes away actually from creating. By letting digital tools absorb all of this, we liberate the full capacity of the design teams for really creative work, which for us are defined by exploratory thinking, by judgment, by intuition, by taste, which are all the most human of qualities and not necessarily the forte of AI. The best designers in the future are needed for the best curation, the most unlikely of combinations, the most illogical but beautiful choices, and for thinking the unthinkable. Now let's get to the result. What does design enable us to do at On? First of all, we've always had the goal to operate with one design language because we believe, A, in the stretch of the brand.
We always as well believe that we can speak one design language in several dialects, and that we can go very far with that, and that we don't need 100 sub-brands. The more that we grow On, the more it becomes recognizable and the more we can build bridges across verticals. Something which I enjoyed a lot is last week when the rumor kitchen was boiling at its hottest and you could see AI images appear of what perhaps would a football shoe look like or another shoe that we might go after. You could say, "Ah, the people copy us with AI." What I'm really fascinated is the people are getting it pretty right, which means they pretty much understand the design language. The design philosophy unifies, but it's not only about the aesthetic language. It's as well about implementing the horizontal tech transfer.
We've always rejected to just say the best physical product comes at the highest price just for an elite buyer. Our goal is always to apply that as horizontally as possible, not only aesthetically recognizable, but as well really offering the function. My very favorite example these days is our lightweight jackets. This started in a way where strictly for our athletes, trail runners and runners, we set out to get two records, lightest windbreaker and lightest membrane jacket. We achieved two outstanding pieces that were foreseen as safety gear, mostly for the trail runners, so they can pack it up that size and take it along. But very quickly, this very techy appeal was recognized by buyers far, far into active lifestyle.
We have identified this gap, and we very, very deliberately want to be the brand that occupies this gap as we see it, which is defined by technology, material, and a very translucent, lightweight tech appearance. Last but not least, the third piece is now we really can start to compound. It is about cross-category expansion, and this has been very enjoyful, I have to say. In the very beginning, we had to learn so many things in running. We had to learn so many things in tennis. Then when we entered training, slowly we could tell, ah, we have learned something that we can use again. While footwear always remains hyper special at the end, I think about the process in design and engineering, you can take so many things along.
Now that we are adding sports, the things that you have seen this morning, this all comes very, very beautifully together. This is exactly how this design discipline establishes technical credibility all across the board. As an example, in footwear, I would like to give the word back to Scott, who shows us how this unfolds on the road.
Let us talk about performance running. As a brand born from running, we are absolutely privileged to be part and right at the epicenter of an ongoing mega trend. The running landscape today is more competitive and faster moving than ever. Global participation is exploding to historic highs. The London Marathon in 2010 had 120,000 applicants. Today, in 2026, it is 1.3 million applicants. If we look at our premium TAM, for us, we define that above CHF 160, is outgrowing the broader market, growing to 36% of the CHF 22 billion total running market.
We disrupted the industry 16 years ago, and we are accelerating that disruption today. We are taking that proven science, that Swiss engineering, a very disruptive manufacturing, and bringing them together into a franchise architecture that we could build 20 generations of running product upon. Remember, we are only on Cloudsurfer three. Most other brands are on 20.
That is what we are building it upon. The playbook Olivier pioneered using innovations to build unique sensations for running has not changed. What is new is how we explain our product architecture to our communities and to our retailers. It truly brings that differentiation to life. To make the product choice easier and more intuitive, we engineer four distinct underfoot sensations, pairing specific CloudTec geometries with custom super foams. First, support, delivered through the franchise Cloudrunner. This builds the runner's confidence measured by core stability, not by weight or size, by core stability. It uses wider base geometries, asymmetric heel clips, and a cradle-like CloudTec cavity that guides the foot naturally. The second is soft, delivered by Cloudsurfer. This focuses on neutral cushioning and smooth, effortless transitions. CloudTec Phase cavities collapse sequentially paired with Surreal super foam for an intuitive heel-to-toe ride. The third is the Cloudmonster.
This is designed for high rebound, forward acceleration, and explosive bounce, combining maximalist clouds with responsive foams and an aggressive rocker profile. The fourth and last is fast. We have talked about it a lot already, is our Cloudboom franchise. This is built for maximum propulsion, fatigue resistance in that last 10K, and race day personal bests. Feedback from our customers and key accounts on this new architecture at our recent Paris Run Summit was overwhelmingly positive. It not only enables our performance credibility, but it enables us to really cut through on that shop floor and online. We have already substantiated this architecture with two releases so far this year. We have talked a lot about it, but the Cloudsurfer three is already launched, actually exclusively with Run Specialty, but officially on October the 1st. This marks the commercial debut of the Surreal super foam combined with CloudTec Phase.
Surreal is 15% lighter, 20% softer, and 15% more explosive than Helion. In pinnacle racing, the LightSpray Cloudboom Strike two has a brand new CloudTec technology, the CloudTec Sphere. 15% lighter and at a lightweight 158 grams with a LightSpray upper. It showed a huge jump in running economy and a demand six times more than initial availability. We are working hard to catch that up. This potent mix of advanced midsole technologies and industry defining LightSpray upper delivers meaningful performance. That same integrated approach that we have taken to running, clear communication On simple methodologies, exactly what we are now bringing to the apparel range. Thilo will talk through that.
That is a very nice jacket.
Olivier and I wore the same one.
Okay. Thank you. I want to start this section with the saying, "Precision is the silent authority of premiumness." I think we have been very encouraged in the past by the fact that a lot of people who ever picked up a piece of On apparel immediately saw and felt the precise make of it. We made this an absolute non-negotiable, a product brand marker physically. Beyond its precision of make and function, apparel, of course, is the cultural expressive element which is able to connect all sports. Two simple points and a very strong view on expression guide us here. The first one is not new to you, so I am keeping it short. We view the athlete as a single integrated performance system, and we want to deliver toe-to-head confidence and emotional connection precise to the 10th of a millimeter, no matter what piece.
Everything said, I think what you saw this morning was hopefully not what you knew and expected, but you do know our performance expression that we have been building for years. Secondly, we have invested really a lot into materials and material innovation. As in footwear, we believe that materials, and therefore technology and materials, are going to be even more defining for design than they already are. They are the base on which every expression is built, and this is exactly where we have come a long way. What franchises are in product portfolios, technology brands can be to material innovation. It is a purposeful, intentional compass on what to focus on, both for us internally when we build and for the customer externally to find guidance. We therefore built our two material technology families. One is about functional technologies, engineered performance, and climate utility.
In there, we have DryTec, which is a two-directional moisture-wicking and rapid evaporative cooling technology. We have ThermaTec, which is a high loft, low weight insulation. We have GuardTec, our own system of waterproofs and breathable membranes. On the other hand, we have a material technology family which is more on the side of tactile sensory experience and of adaptive fit. We named it SenseTec, which is a family of velvety next-to-skin touch that prevents cling when wet for distraction-free movement. We have FormTec, high power elastic recovery and adaptive body sculpting. It is way more than rationalizing about material. SenseTec, for example, has been one of the most successful pathways to bring more female athletes to On. After the foundation of those two logical points, here comes a bit my emotional closing speech about expression.
Everywhere, but I think especially in apparel, we just refuse to play in the sea of sameness, and we very deliberately want to be a brand of the and. Easy to remember. I put up this picture here because on the left, I think is what people know from a high-performance context. On the right is what we think is the expression of a contemporary sportswear brand into active lifestyle, and you have seen many of the pieces and their expression with a very strong focus on her this morning. It all comes back to the and. Remember that in the very beginning, it was the soft landing and the hard push-off. Today, we still reject very deliberately design and everywhere else to be a mono-dimensional brand. We design for the and.
We are not doing it in a way where we are all over the place, but we do it very, very deliberately. A recent industry feature which you might have read placed On squarely between mass athletic wear and luxury outerwear, and we loved it. We believe that we both have the brand and the design team that can take the stretch and that can create the perfect product for an active time while we maintain from the beginning, design-wise, the rigor to execute on it. These principles that I just told you about, they give us the clarity and the confidence to explore many facets of sportswear, many, many more. We do not dilute our design equity with it. Remember, we speak one language, different dialects. Everybody gets it is one brand.
This might be the difference really to others, because if we did not challenge the aesthetic status quo, if we did not connect the dots in the most unexpected ways, and if we did not rely on human intuition, then perhaps others and even AI could do it. Oli, do you want to close us out?
Thank you, Thilo.
Happy to. Yes. I saw two laps stop closing as soon as I stood up. I do not know about the impression I left. You could leave it open, but still you do not need to take any note. It takes 45 seconds to close. Is not that amazing? What all started in this little kitchen in my small village. I am really emotional, getting emotional.
I never thought that it could become a company, and I am sure nor David, Caspar, or anyone that joined us truly believed what we see, what it had become nowadays. What you have witnessed firsthand in our maker space, from material science at our foam competence center to the automated robotics of LightSpray and from podiums at the lead running to technical textiles, every single breakthrough, and it is every single breakthrough, reflects one relentless drive to reset the industry's benchmark. That is our reason for being here. Now, not only looking at you, also myself and looking at my two co-founder friends, I think it is time for a break. It is seven minutes to 10 in the U.S. I think it is time for the second, third, or fourth coffee, for all of us to stretch a little bit, to use the washroom. Hey, use that time.
Again, whatever you need to do, we give you 20 minutes, so that means let us gather back at 4:15 our time. Thank you, everyone, and we truly appreciate your presence today and your attention to our story. Thank you so much.
By the sunlight. By the sunlight. By the sunlight. La, di, da. By the sunlight. By the sunlight. By the sunlight. La, di, da.
Thank you.
Hello.
I think there's a few stragglers to make their way back.
Please have a seat.
We're in the tough slot after the coffee.
Yeah.
I'm Alex. I'm not sure whether I should apologize for being responsible for marketing or to praise it. Based on the number of questions I've had today and yesterday, I think we're on the edge somewhere.
My name is Gerald. If you have any color recommendations for the products, I am your guy. I am the Chief Product Officer. Thank you.
We are here for the next four and a half hours to speak about product and marketing. Just checking everyone is still awake.
Yeah.
The classic gag. Gerald and I actually represent two incredible forces at On, two incredible teams that work on product and also on marketing. What does that do together? It creates a brand. Amongst our very busy schedules of meetings throughout the day, our teams are working incredibly hard on forging that brand. Because as Scott said earlier, when a consumer comes to our brand for the first time, and maybe comes back for a second and hopefully a third and fourth, they are feeling the brand. They do not feel our functions. They do not feel all of the ins and outs of our day-to-day. They feel something hopefully very special, and that is really that killer combination that we work on every single day. What does that mean? What is the result of that? That of course increases our TAM.
It is the overall addressable market that we want to increase.
In product, you heard it before, we slice and dice that addressable market in what we call community mindsets. We have 14 community mindsets that we built, and through our innovation pipeline and through product sensations, we make sure that we can satisfy those community mindsets altogether. That starts with the peak performer in running and goes now all the way to a premium active mindset when we talk to her in apparel.
But that leads to a pretty big question, and I have heard it a few times today and yesterday. It is how do we stay true to who we are as we grow. It is a very clear question, relatively complex question, but the answer actually sometimes is quite simple. We stay very true to who we are by focusing on innovation. This is not just in the product space, it is pretty much in everything that we do. You saw we went to market last week in the biggest sport on the planet. Our approach was very unconventional. It was very different to how other brands would approach that. If there was a secret sauce of On, it would be something in this approach of saying, this is how others do it, this is how we are going to do it. We want to be different.
We want to approach it in a very unique way. So the role of our brand within the Premium Playbook is hopefully very clear. We start from a point of view of authenticity. You have seen this slide earlier from David and Caspar. It shows some of our best partners that we are currently working with. There is a lot more behind the scenes as well. What I can add a little bit more flavor onto this picture is that when we work with these partners, they are not just a face for hire. They come to our brand. We sit often around their kitchen table or somewhere when it comes to On Labs in our spaces, and we talk about what are the things that we really find important together. It is actually more like a slight sibling relationship, from brothers and sisters.
They tell you when you are doing good and when you are doing bad. Sometimes it is hard to hear. But the reality is that all of these partners, they spend time with us at On. Zendaya, a few months ago, she came, looked through the entire collection. We had about 10 or 15 different versions of yoga tights for her to try and sample. She was giving us extremely direct, clear feedback. Roger in the same breath. People often think, "Hey, does he really come to On? Does he spend his time here?" He actually does. He has a parking space. He does have a real badge. He comes here, he tries product, he tells us what he thinks. It improves everything for us. What we know from all of this is through adoption. Adoption that we buy does not compound. Adoption that we earn, that does.
That's the engine that keeps all of this brand actually running. We're building, at the same time, in a pretty new and different environment. When I was on the stage three years ago, we were talking about this emergence of this thing called AI. Now we're living and breathing this all day and absolutely every day. To be honest, this has radically changed the way that we go to market and the way that we tell stories, the way that we capture demand. In this space, it's a real shift in the marketing playbook, and it's meant that whilst media spend absolutely still matters, it's not the driving factor around how we're going to go and build this brand.
You see from the examples on the screen, when we go to market, when we tell our stories in the most authentic way, through entertainment, through storytelling, through things that really capture attention in an entertainment space, this is where the media power becomes even more important. When we're all scanning on our phones, going through the feed, what is the thing that you stop and you engage with? Is it an ad in the classic sense? I think now, especially with younger generations, they are extremely in tune to when they're being classically marketed to. They want to be entertained. They want to feel authenticity. They want things that stop that thumb, help them to engage, and hopefully help them to come back over time.
As a brand that believes in innovation and in creativity, that's great for us because we're very well placed to tell more of those kind of stories. We want to work with the algorithm, not against it. In this very fast evolving space, this means that we can be pretty rapid. We can test and learn. Spoken at length over the last couple of days about how AI plays a role, not necessarily in the things that we create, but how we test and learn over what we create. This is just an amazing opportunity for us to be different. We want to give you a slight look back over what we've done over the last three years. When I was here last time, the buzzword was communities back then. At the core, has always been run. It will always be run.
This is the absolute epicenter of the brand. Back through 2023, we spoke about how the emergence of a couple of new core sports. We had tennis, we had training that was amplifying out to a few more communities that we were reaching. You heard earlier, what does that hard work achieve of building the brand? This has increased overall by 2.5%, which is fantastic. What we actually promised back then was that we would be at over 30%. I'm very happy to say that all of that hard work has now achieved that. In the performance space, actually, one of the questions I've had over the last few days has been around our athlete approach. We are not a scattergun brand. We do not go out and bring on endless number of athletes, endless number of partners. We are extremely selective.
We are very precise in who we bring to this brand. We make sure that we see eye to eye, as I mentioned earlier. The things that they care about are the things that we care about. When we forge that partnership, that is when the magic really happens. You can see here that this is back in European Championships just last year. We only had 3.4% of the athlete quota that got to the start line. That equated to 10.7% of the medals. So a precise formula that gets us from people that want to work with us, that feel credible, give us incredible feedback like brothers and sisters, then we go and create the products that they need to perform. Switching gears from performance and into the more lifestyle space, we have someone relatively well known called Zendaya, one of the best actors on the planet.
We select partners like this to help us to amplify the brand overall. Major moments with people like Zendaya. We had an incredible Super Bowl advert where we put Roger Federer and Elmo together. Not necessarily the partners you imagine going together on Super Bowl. But we created entertainment, we created cultural moments, we created these elements and these moments where consumers really interact with us as a brand and they start to understand what we actually stand for. This is really the power. With this film, this recent spot that we created with Spike Jonze, Emmy Award-winning director, with Zendaya, we crashed every benchmark possible. We had 87 seconds of average user viewing time. That is on a three minute film, which is pretty exemplary. Our partners at YouTube, Google, are somewhere in the audience. They tell us that this crashed through every benchmark that they had.
The ultimate goal of that was a 730% brand lift. So it is really putting the playbook at work. Great partners, great entertainment pieces tell the story of product. This equates to our overall brand growth. Another great example of this is how we take from performance all the way to what we call expression and lifestyle. You heard earlier around the Cloudsurfer three, an incredible product that is coming to many feats of runners in the coming months. This actually started very much in the lab. It was around the creation of CloudTec Phase. Think of this in the lab. You see on the picture on the left-hand side, engineers working on perfecting the exact version of CloudTec Phase. How is this going to compress to create the soft landing and firm push off that we have back in the garden hose from the early days?
That was really the nucleus of the idea. But then fast-forward a couple of years, we took that through to one of our best partners, Loewe, one of the hottest fashion brands on the planet. They picked that up and said, "Hey, that is just an incredible looking technology and design." So we took that to a fashion market for the very first time. Now we see that going all the way through to a more expressive version with the Cloud remix, which is now one of the hottest sneakers with our European partners in the top three, actually, of the best-selling sneakers. So performance, relevance, expression, back to the playbook, is how everything starts with performance. Consumers really want it, but we can take it all the way through to lifestyle.
I think another great thing with this is that we have mentioned it before, we do not have an archive. We cannot go down into the dustbins in the basement and pick out something from decades before. But what we know from consumers is that other brands can do that. They want newness. They want innovation. They want freshness. They are actually pretty hungry for a brand like us to come along with something very, very different. We were on the streets of Marseille just this year, and we start to see the nucleus of consumers putting this on their feet.
We see groups of six or 10 friends together, and there is one or two Ons. This did not happen a couple of years ago. These are really the green shoots of what we see from the future. So that awareness development that I mentioned earlier. Back in 2023, we were around the 12%.
We put a lot of effort into growing that brand. Back then, we were in this cohort, what we called the run peers. So we were kind of hanging out. We were emerging brand On, hot on the tails of some of our competitors. But we have seen through that growth within brand awareness, we now get to above 30%. And that really is now the headroom that we have, because the brands on the left-hand side, which are a little bit longer in the tooth than us, been around for a few more decades. They are more in the lifestyle space. They have more categories to play in. You saw it with the emergence of football just over the weekend. This is now the permission that we believe we have as a brand, the opportunity, the growth that we have to go after ever more fans.
David mentioned over the weekend, we are just talking about three days here. We had 50%, over 50% of the awareness share of the voice of people talking about On as a brand. Was it CHF 8 billion? Was it CHF 80 billion? I think we all have our eyes somewhere on the future. Three days of CHF 8 billion, I think we are quite happy. We will take CHF 80 billion in the years to come. So we mentioned the 30%. Now that obviously grows. We set our target of over 50%. I think we are absolutely going to smash that when we come back in a few years' time. Run is still at the core.
Core sports, new sports, as we now mentioned, and then broadening out into lifestyle and culture. It is not a compromise, as I said earlier. Consumers are very hungry for innovation. They actually want to know how CloudTec works.
The next step, of course, is how does it feel? How does it look? Are there colors? Is it in my size? All of those things are obviously extremely important. But we set that target very precisely, and with the new sports, we feel that is fully achievable. So unsurprisingly, when you break down that 30% that we are currently at, running, being our core, is the largest at 40%. With the female consumer, with women, we are at roughly 30%. Non-runners and the younger age range is a bit lower. So do not look at this as a negative thing. We see this as opportunity. We have just one sneaker that we feel we can stand behind as the sneaker of the moment. We are going to add many more franchises over the future. We are adding apparel. We are adding new sports.
Fueling these awareness engines is fully in our grasp and something we can get after with our Premium Playbook. That brings us to what we would call a confidence framework. Because of course, if the consumer wants to feel the brand and wants to hopefully fall in love with the brand, they should have some confidence that we are doing some great things. As Scott and everyone has mentioned, we put the consumer at the heart of absolutely everything that we do. We feel that when we have these six signals working extremely powerfully, that is when the consumer has the most confidence with us as a brand. It starts, of course, with Gérald in product experience.
With product experience. Yes. Scott, Thilo, Olivier talked a lot about product experience. I think just in a nutshell, as I hold a bottle of water, what we are trying to do is to really give consumers 10% extra. The 10% you speak about, the 10% of that experience where you go to your peers, to people in the gym, to people on a run route, and you say, "Have you seen this? Have you felt this?" We will always do the 100% job, but we also want to leave that little extra that gives you the confidence on the product experience to bring everyone else along.
The athletes and cultural relationships, as I mentioned, are a key element of that process. We turned up in Copenhagen just last weekend, absolutely smashed it with incredible athlete results, with product that we turned around with LightSpray at an incredibly fast time. We know that when more people talk about our brand, when they enthuse about our brand, that is when the magic happens. That leads then into the retail space.
Which for us was so crucial to break through in apparel and accessories. If you look at how we now really build toe to head, our own retail is the perfect expression of that. Alice and Rebecca are going to speak a little bit more about how we build now beyond the 80 stores that we have. Our own retail is where our confidence is expressed at its best.
I think we spent quite a lot of years, us the brand, speaking to the consumer. I think that was very important in the early years, those first formation moments. A lot of us explaining the technology, what we stand for as a brand, almost introducing ourselves with a handshake. I think what we now know is that putting the voice in peer and social proof is ever more important. You will see a lot more people speaking about On through their voice now and in the future. It is something that we are focused on a lot in the coming years because, hey, if someone recommends you as a brand, that is often more powerful than the brand speaking for itself. We have had the early days of when someone would see a shoe and say, "Hey, what is that?" Hopefully, they would tell a very good story.
Now we know through the digital media and the algorithm is that we have to have more people amplifying our brand, more people talking about the great things that we are doing.
Which in the Premium Playbook that we heard in the keynote makes this demand generation opportunity much more precise. If you look at where we place content and how we make media bets, we can be extremely concise and precise in our execution.
Alice and Rebecca, who are up next, will talk a lot about the experience, particularly in the digital space. We know now more than ever when we are trying to find a brand. Are you going to ChatGPT? Are you going to. A lot more people are going to Google still or some of the other spaces. Our digital space is really where a consumer can feel everything from us as a brand. You have experienced lots of new things in the spaces today. But our digital space is really that global flagship digital experience, which has to be the absolute pinnacle of when you come to experience the brand. We are going to go through the engines. You heard the three core engines earlier, run, sneaker, and apparel. We have added a fourth one cheekily to the right-hand side.
Yeah. That is fine.
because we know there is always room for one more. We are going to give you a bit more insights into how we look at this. We will start with run. You heard earlier the incredible amount of effort that is going into our core run franchises and how we are going to double down on bringing those best sensations to the world. There is really three core things that we look at when we try and amplify our run story. We want to be there with run culture. It is something that has emerged over the last number of years. What that simply means is being at the places where runners are, speaking to them in a way that connects with them.
whether that is turning up at the best running routes of the planet, being at the most incredible events that we can put on, or infusing about that with athletes, that is really the focus of our run culture work. I mentioned athletes. We leverage them. We believe that the precise nature of how we bring these athletes on board, having them talk about what we do, and then obviously put the money where the mouth is and put it on the track. That is where the magic really happens. The third portion of that is about the right experiences. So the very best product experience. Walking into our stores, immediately understanding the differences between our franchises. Having an incredible conversation with the sales assistant. Going onto our website and being able to just do a shoe finder to find that very best product.
This is where we will put our efforts within the run space.
And you heard it from Scott, CloudTec can now do it all. We want to make it extra simple for our consumers to understand where they should find their home with us. We have four product brands that we built in running across the four sensations that we strongly believe in. Then we add extra sensations within those four product brands. If you think about the Cloudmonster, where we now bring a trail running shoe within that franchise, it is very clear that through CloudTec engineering and our high-performance approach and how we put those two things together, you are going to get great energy return even if you go off for a trail run.
Across all of those franchises, of course, LightSpray is coming to life as our pinnacle technology. We will make sure that from a strong retail partner all the way through our homes in D2C, you are going to be very easy and clear to understand where your home is, depending on your style of running.
Sneaker. Next big area. As I mentioned earlier, we have made some early, really big steps with the Cloudtilt, which we are all very happy about. The younger audience is starting to take notice of us. We are disrupting in a space which is pretty much ripe for innovation. From the shoe room, the footwear room that you saw downstairs, the lineup is incredible. Again, with our partners, they give us a lot of feedback. We are very happy to take that. We want to work in combination with them to bring the right products to their consumer in a very authentic way.
Again, we want to be different. We do not want to be just like everyone else, so we are very precise on what we do. With our kids and youth space, actually, it is only 5% of the current footwear business, so a lot of headroom there at the same time.
I really love this chart because we can build lifestyle through different lenses now with adding football to the mix. We will always have a very strong lineup when it comes to what is Born in Run. If you look at the Cloudswift, the Cloudmonster, and the Cloudtilt, this is all true running technology that we now translate with our core partners in the sneaker space and give that more options, more materials, more color, so that you can renew your inventory every other season. We are also very proud to continue the journey, obviously, with Roger and what was Born in Tennis. As we open up also having leather in our portfolio, we are renewing the Clubhouse as our center point of the sneaker strategy for what we call Born in Tennis.
And then last but not least, I think that is a very important point, and just a first glimpse of how we will translate what we built on the pitch to off the pitch. We know that is incredibly important, and we have a lot of great ideas, and we will very early in 2027 start to go off pitch in football as well, and I can't wait to show you what that's going to look like. There's a little example from last weekend, just to give you a little bit more color on the sneaker strategy. This is the latest release with our friends at Kith in New York. And Ronnie's now, for a couple of years, edited several of our sneakers.
The main focus point for this drop was the Cloudswift, but also the Cloudzone, where we look at how we can bring energy, the same as Alex spoke about with Loewe previously, through our sneaker franchises with a Kith Run Club, who will be now New York, L.A., Tokyo, and Seoul, running in these products every week. At the same time, then translating that towards an inline business for us as we go in spring 2027 and build a bigger business behind the Cloudswift. Kids, you mentioned. They're not just cute, the very little ones on top there, but they're also absolutely true product integrity followed through. That is super important to us. We always say it's from 0 to 99 now, and we want to make sure that we really execute at the highest level.
From the toddlers all the way to the kids, to the youth, and then to the adults. You'll be able to get full product franchises from us, and we're super proud to bring the very little ones into something comfy and something very good-looking as well.
With apparel, we build from her. Again, when we speak to consumers, which we've done a lot of over particularly over the last year within apparel, we hear from her that she actually does sports a lot. The interesting point is we've heard from consumers that we actually don't do sport that much, and then when you hear how their day actually looks, you realize they do sport a lot. It's extremely integral to what they do, but they don't want to be defined by that look. I think there's other looks from the past, which are the sporty girl, the sporty look, and what we know from this consumer is they definitely want the functionality, they want the performance and the materials, but they want to style it in a slightly different way.
Everything that you've seen from the product presentations has been about elevating that look, styling that look in a very different way, and we feel that's something that the next generation of consumer is very keen for.
I want to keep this very brief at product strategy and our three pillars. We're not going to slow down in Dedicated. For those in the room, you've seen this morning in the fashion show, there's a lot of great things that you can run in, look great. We have a lot of material innovations coming. Thilo spoke about that. We're going to double down on that and make sure that we have that peak performer mindset represented continuously in a dedicated space for all the sports that we do. When it comes to the second pillar, it's what we call the Essentials. We want to take the best materials that we've built and the most mainstream. Can I say that?
You said it.
Yeah.
Okay.
The most mainstream silhouettes, to as many people as we can. So we build an Essentials range together with our creative team that should capture a huge market out there with our best materials, our greatest silhouettes, and a very easy-to-style look. Then last but not least, the one thing that we're all so excited about is how we build our foray into premium active. How we take a more natural approach to materials, how we look at the silhouettes all together and make sure they transition well from a more workout or gym space all the way through your every day. How we innovate a lightweight jacket together with a pant so that we can represent her in her true self with the ideas that we bring in premium active.
We sneakily add the last fourth engine with football. We are three days in, so there is not too much to report. You have heard some of the fantastic numbers that we are very happy with. I think overall, how we see football, it is a new engine, it is not a completely separate one. We know that a lot of the consumers or the customers we already speak to in those other three engines, they care a lot about football. We see from the very first days that actually that audience is very connected to those other spaces. They are already asking what people like Kylian Mbappé is wearing when he turns up at a training ground. He is decked out in, you guessed it, On apparel and On footwear, not just from the football space, but from the lifestyle space.
This just shows how that engine is going to really be a superpower for the other spaces that we have.
Actually decked out in On Essentials.
There you go.
We have three incredible athletes that we partner with, and we spoke a lot about how the athlete is at the core of how we develop. With Sydney, Thierry, and Kylian, we've really found great partners or siblings, as you called them, and they're in the lab and they're working on pitch, off pitch, all together, and we want to make sure that we create that full sport through On's DNA, and that we have our own take in that sport. That actually started last week. This is one of our prototypes that Kylian wore in one of the trainings last week, and we're tinkering back and forth. There's a lot of little details, a little thing here, a little thing there, but I can guarantee you, this is going to be the best football shoe that was ever made.
That's a promise.
Yeah. It's okay.
We'll take it.
We can do that.
Those are the four core engines. Three, clearly the biggest focus that we have. Over the coming years, you're going to see how football comes to life in a more meaningful way. Just as a reminder, we actually probably should have added a fifth circle around football. I would've been interested to see what the global brand awareness would've been today.
100%.
It just shows how we can keep adding these different engines, we can keep adding these different awareness drivers. Overall, that's going to supercharge us up to 50% and above. That's just the future, the ride that we're all together on now.
Yeah
With that.
Please bear with us. We're going to set up for a panel. We'll close. Brandon community, thank you very much.
Thanks a lot.
All right. I wasn't gone too long. I hope you didn't get bored. This is going to be fabulous, that's all I'm going to say, but we're going to watch a video first.
A game changer.
Ladies and gentlemen, please welcome two absolute legends, Roger Federer and Thierry Henry.
Thank you.
I hope they're happy with us, that we're sitting in the wrong order.
Oh, we're sitting in the wrong.
Yeah, sorry.
We're okay.
You got us some seats. I saw you guys were standing. I was like, "Oh, we're going to have some seats.
It's comfy, no?
Yeah, very comfy.
Roger, let's start this off with how often you're here. People sometimes don't believe it. We know your dog's name. I still don't know the breed. That's fine. You know more or less every team member's name, and you welcome them, and you're here. You're humble. You just love it, but we actually output a lot.
Yeah.
How do you do it? You come in every day and you're like-
easy peasy? Or how do you get your motivation to come in and create product together with us?
It's great to be always at headquarters here in Zurich. I try to come in as much as I can. I think the beginning of the relationship, partnership, and then friendship as well was very important. When, unfortunately, through COVID and my knee problems that I had, I actually had a lot of time working on product, getting to know the team, and actually getting to know the brand and obviously the founders and became friends. It was amazing. Then, of course, because it's just so close to home, I can always pop in for just a quick lunch or a coffee or just catch up with them, either The Roger franchise team or the tennis team or marketing team or whatever it is. So I try to come obviously as much as I can. I'm also very busy traveling the road a lot.
But it's been an amazing journey so far. Very happy the way we got going and announced the partnership to the world. Now welcoming Thierry and football to On is a dream come true for me personally, because I know Thierry since a long time, and call him a friend as well. So it's so cool to be doing things again together. It's an absolute dream come true, and it's good to see also Thierry at HQ. It's fantastic.
Is it just him why you chose On? Or you could have worked with any other brand in the world. Why did you choose us to build together?
The vision about the innovation, where the game was going to go, the impact that we wanted to have. We talked about it a tiny bit before, throughout the whole day. It started in this building where we had a meeting, and you guys talked to me about the vision that you were going to take, and I wanted to be part of that first and foremost because of the relationship that we're going to have, the athlete that we need to have in terms of our clothes. We're going to work on the product and the boots and obviously the impact that I can have, that you can have, and everybody involved. Mainly the athlete, but also the impact that we can have on women's football, which is important. On how we can develop a boot specifically made for a woman, which is very important.
For a very long time women footballers had to wear men boots, which I do not think is normal. All of that. We were talking about it with Roger earlier. I do think that the game, the brand, whatever game it is, it is just limitless in terms of where you can go and how far you can go. I am sure Roger had the same kind of attitude when he was a player. You are always learning and seeing where you can go, and that is where I see us going. Learning every day and trying to be the best version that you can be.
When you came in a year ago, we put all the team in a room and it was like one, two, three, four big ideas. We have an immediate collision of big ideas and innovation. Did you think of that for a long time, creating product together that was always sort of in your back pocket?
No, it is not so much about creating products. You have a vision of how the game should be and how you should go about it, and what you want to bring back or not. You are talking about in the first meeting that we had, obviously people were talking about different ideas. You had one, I had a couple, maybe more than a couple. Does it work? Does it not work? Where do we go with that? We all know that diamond comes from pressure.
Yeah.
You need to be able to push people to a certain way on what they can achieve. That does not happen by relaxing and not having ideas and not coming together and sometime argue about it, and it is just normal. I would take the time quickly to thank everybody because to be able to, and I said earlier, but I will say it again, to be able to create something so quick, in what we were thinking of when we were in that room, to be able to impress Sydney, Kylian, and everybody is just outstanding. I had ideas, but like I said, I was sleeping at night, and those guys were not sleeping so much and pressure was there, but that is just how it goes.
Talks a lot to the athlete's respect, right, that we have as a center of gravitas almost, Roger. I mean, we were almost at the end or towards the end when we started working together, and then we were able to attract a lot of young athletes through that. How do you define that kind of athlete's mindset when you bring it in and you work on product or the athlete respect in that sense?
Yeah, I mean, that was obviously a very interesting learning curve for me as well at the back end of my career, to then start basically the tennis division here at On and trying to understand who could be a good fit to the brand. How do we, well, design a shoe with Olivier, which has been a very cool and fun journey. Stressful at times, but we made it work. We even started before we even had a deal and made it in time, three days before my comeback in Doha, and that was obviously super special. But I think it's very important to make the athletes feel very special because everybody has a unique character.
They all want to shine in their own right, and I think it's the difficulty in for us to make that happen, that they feel are being seen and listened to, and they all have some input, like Kylian now with his boots and me with my shoes in the beginning, or Iga when she tried to move into her shoe. These are really fun challenges. Can be stressful at times, but coming from an athlete's perspective, some guys are just super chill. They're like, "Give me whatever you want." And some others, they tinker for life, and they never stop.
I think this is where we need to have strong teams in place that can speak to them, build product for them, but also sometimes mentally calm everybody down that we will get to it eventually, and it's just we need to also play the long game and understand some things just take time as well.
They also executed on your golf shoe briefing, right?
Yes. I am wearing the golf shoe. Very excited about my new sport. We timed this good. You should try it out, by the way. Gives you more time to play golf. I am very excited to see that we have officially moved into golf, and I think we can maybe also use the blueprint from tennis when it comes to golf, because football is very different, in my opinion, even though that is the sport I used to play and then chose tennis over football, and now I am into golf. It is a very exciting sport, very demanding technically and mentally. Demanding and challenging. So love the shoe. Really comfortable. It is great, and I am looking forward to everything that is to come.
On a product integrity lens, right, where we spend a lot of time, it is beautiful to see now those overlaps. Obviously, your input also into training and how we think about lateral movement, how we take what we learned in tennis
Yep
we apply it to training, you being also on many different fronts. What is important for you, Thierry, when you think about this as a product? You have been wearing our stuff now, please be critical. What excites you? What is that Premium Playbook that we spoke about all day for you, in your mind?
Well, I always say that when something is good, something is good. People do not mind to go to where they need to go to with a premium price or anything that is premium. That is the start. I will go back to what you just said, and yes, people will say, obviously, I am saying that because I am part of the team, but generally, I do exercise a lot. I do not know if a lot of people follow me or not, but I do exercise a lot.
A lot.
A lot, yeah.
He knows.
And so-
Look at the shoulders.
I do, and I do wear the product, and it feels great, in all fairness. Whether it is running, lifting, or HIIT sessions. I do wear it, and it does feel comfortable, obviously, to wear it firsthand. To go back to the point of reaching that proximity with the players, it is always great when you If you are an athlete and you reach a certain level, I mean the level, and some of us try to emulate what they did in our own sports. You want to be seen. People do not understand that with athlete, that although you play in front of a lot of people might see. Sometime on a human level-
You want to be seen. You want to be heard. You want to be part of the conversation. You want to be like, can I at one point I mean, if you talk about Roger or even me in my game, you reach a level where you are like, "Okay, I think I have done enough to be part of some conversation in terms of what can be achieved into creating something that I am going to perform in, by the way.
Yeah, it is important. Being seen, I am going to repeat what Roger just said, and being heard. But yes, so far, I have to say, in terms of what I am using in the gym is good enough, so I do not have to be too critical.
Roger's tennis shoes, they are good for your tennis?
Yeah. You know what? They do not make me play better because I am not that great.
But I move better.
That is for sure. That is for sure.
He is a very good mover. Makes no mistakes, and I was very impressed when I saw
I saw like 10 years ago
Thierry play. It has been a while ago, so I do not know if you are rusty or better. I will
I'm actually
have to check it out
I'm actually better.
Yeah.
Ooh.
You want to judge his football?
Sorry?
You want to judge his football?
Hey.
No. No.
We all saw that.
Did you see what he did a few other day?
Yes, that's why.
This guy is not normal because he's like- No, you're not. You make the difficult look normal. That's your issue. That's on you. But he's not normal. I told him to do something, he did it three to four times or whatever it is, and he did it. Who does that? I wouldn't be able to, if he says to me, "Take the racket, do that, and then play it along or across the court" or whatever, that will never go across the court straight away, whatever gesture it is, and he did that straight away. But we already know how his brain functions. Actually, we don't, but anyway.
We don't. There's a very fun one where within 11 days you won the Champions League and this guy won his Roland-Garros title. We both chased that.
Yeah. For a very long time, that's for sure. It's kind of weird. You said that, we actually never realized that, so 11 days apart, my first Champions League and only Champions League, and the same with Roland-Garros.
Only Roland-Garros, yeah.
Well, the rest you won 20 billion tournaments. Yeah.
Still.
Still you won.
Yeah. Smells like an 11 days capsule that we should probably do together.
Yeah, maybe. Why not? Or something, yeah.
We're going to have fun. It's going to be good times. Looking forward to.
We can always have a.
spending more time and creating, yeah
or redo one of the workouts we used to do on holiday.
Oh, yeah.
You went, "Oh, yeah.
Nope. I just want to close it with one last thing, I think, which is kind of the spirit you bring in, and we talk a lot about culture, but the way I think that this company operates and what we have learned from not just, it is hard to understand the athletes in that level of detail, but the mindset and the overall obsession that you bring in and how we create product together. Just from your own point of view, I think, what are you most excited about when it comes to now the next few years ahead, and how do you look at that together with Roger?
It is what I always say, it is what I do not know about yet, if you know what I mean, because that comes from being in a room together and create something. Sometimes things comes like that. Arguing, you might say something that I do not think is going to be working. Like I said, it is limitless. This is what it is. What is the best dream you can have? It is the one you did not have yet.
That is always what I think of. So, and I am going to repeat that and I will say it again. The most important thing is to be in a race to be able to win something. When you are not in a race, you cannot be there to try to win anything. But I always say that there is never a finish line, right? This is not a thing, the finish line.
Run as much as you can and as fast as you can and keep the right stamina if it comes to, or the right tempo if it comes to Olivier, because I cannot run that long. That is for sure. But do you know what I mean? That is what I am thinking of all the time. What did we still not think about?
If you know what I mean.
Yeah.
That comes by thinking about it all together.
Mm-hmm. We try to call it the explorer spirit. I think when you come five, six years ago, and you are like, "Let's go. Let's do tennis," then you just go, and we did the same thing 12 months ago. Yeah. You come in, you coach people to think the impossible. It is that explorer spirit that I think brings us together. But I want to leave the last words with you. We call you the blueprint, internally, because you created that idea on how we can expand, create new verticals, and make sure that we stay so true
Yeah
to what we do.
It has been quite the journey, I must admit. Loved it. It has been super interesting. I learned a lot along the way, and I am happy to see that we are having success doing it. Of course, in sports, winning is important, but also the journey and the smiles and the memories we take along the way, I think are really important for us, and I think that is what I am looking forward to also create in the future. It is obviously a great product for people have whatever they are going to wear or especially also how they are going to feel in their shoes, in the On's, that they really feel that a lot of details and work have been put into it. It is nice to have seen that with tennis, now golf, and now also football coming, and running, obviously thriving.
Really exciting time for the brands, and I am really happy to be part of it. Hopefully when we sit here again in 10 years from now, whenever it is, we are going to look back at actually how amazing the journey has been all together, and that is something very exciting and I am ready to go. Thank you for having me.
Thank you both.
Appreciate it.
Thank you.
Now that the men's doubles is over, it's time for the women's doubles.
Whoo.
Hi, everyone. I'm Rebecca Cai, our Chief Global Markets Officer. Previously, I was running our business in Asia, and now I oversee all of our markets globally. I'm very excited to be joined on stage by Alice.
Hi, everyone. So nice to see you all. I'm Alice Delahunt, On's Chief Customer Officer, and I oversee our D2C channels with a specific focus on retail, digital, customer, and loyalty. I'm officially on week three, so what a time to start, albeit nervous to follow a panel like that. Phenomenal. I'm going to talk to you today a little bit about my experience, what I've done in the past, I think the opportunity we have here, and the work we have to do, too. By the end of this presentation, you will see that we have an opportunity to be even closer to our customer. You will see that we have significant runway for growth in all markets and all channels. This is why Rebecca and I are the perfect partners.
We have two dedicated roles, one to accelerate penetration within our markets through an ecosystem approach, and the other to drive our direct channels with a specific focus on a customer lens. I'm going to pass over to Rebecca now, who's going to talk you through the plan for growth.
Thank you, Alice. Today, you have heard about our obsession with innovation, which shows up in our products, how to validate these products through athletes and talents, and drive resonance and excitement within our communities. This session is going to cover how we take that resonance, demand, and through premium experiences, translate that into commercial success. Before we start, please enjoy a short film of our recent store openings. This video gives you a snapshot of just how far we have come. Three years ago, we were just at the beginning of our retail journey with only 22 stores globally, contributing to a low single-digit percentage of our business. In the first half of this year, retail already accounted for over 10% of net sales, what we shared we would do at Investor Day 2026.
The number of active On fans online has roughly doubled, and our presence in key account partner doors has also more than doubled. Furthermore, when we look at our markets globally, we can see that we have not had any major market entries. Thus, much of our growth has come from existing markets through expanding our omni-channel presence, driving activation awareness, and deepening our connection with consumers. Looking ahead, each of our regions have highly premium but under-penetrated markets like Mexico, the Middle East, Indonesia, just to name a few, where we have further opportunity to penetrate and scale the business. This demonstrates that every single one of our channels can win simultaneously, compounding our growth and reinforcing our market leadership. We believe that channels can compound, not compete, and not or.
You have already heard today that our plan is to take our net sales from CHF 3.5 billion to more than CHF 5.6 billion over the next three years. Within this, we expect to take our D2C share from around 45% this year to 50% by 2029. A very healthy 50/50 mix, wholesale and D2C. With the 50% wholesale mix planned for 2029, wholesale will add more absolute net sales than D2C e-com or retail. It is a strong contributor to our growth, and I will speak more about that a little bit later this session. But I first want to start out by sharing the three distinct purposes of our channels so you can really understand how we view them and why we believe they can compound. Wholesale is where we started the business.
This is where we are authenticated by our communities that you have just been hearing about from Alex and Gerald. Run specialty is the running community's own room rather than ours. The sneaker doors, where a brand earned its place through culture, and general sporting good retailers who put us in front of people at a scale that nothing else matches. It is also the channel where many people meet us for the first time. Retail is where the brand is experienced in person. The space, the people, the product in front of a fan orchestrated together. It is where she can be styled toe to head by somebody who knows what she is training for, and where our communities gather. Runs, the classes, the nights that we host. In our website and app are where our relationship lives and accumulates. It is our own voice speaking to her directly.
It's also where what we learn shapes what she sees next. It's also our largest store by some distance. What unites each of these channels are some key principles. Elevated premium brand expression, unified communication, which enables price discipline. In fact, in many markets, including the U.S., our wholesale data shows that we have the highest average selling price in the industry and the lowest discount rate. This is the result of those key principles in practice. Let's start with retail, our youngest channel, but already the most premium expression of the brand. Over the last three years, we've learned a lot about what it means to operate a network of stores globally, and these learnings are evident in many places, including how our formats have evolved. We have four formats, and we keep raising the bar in each of them. We first consider location.
Location determines traffic and consumer. This determines our store and how much of the brand that we can showcase. Let's zoom in. First is flagship. Flagship is the most complete expression of our brand, and it is what established us in key global cities. Tokyo Ginza is one of the most demanding luxury environments in the world, and Paris on the Champs-Élysées carries our broadest head-to-toe offering anywhere. A chapter standalone does a similar job, a statement of intent in a city that matters, where a flagship is not the right answer. Stockholm and Copenhagen are both new ultra-premium stores that both say exactly what we intend in those cities. A chapter complement deepens our presence in a city that we're already in. Abbot Kinney in L.A. is the clearest example. It's a neighborhood door where people are hanging out.
It's a community hub with runs and events going in and out of it. A footprint store is how we build local loyalty in a neighborhood, and it's doing a lot of that work in Europe and in Asia. We've evolved our range that we can be present in far more places and tailor much more to each city and each consumer all around the world. Back in 2023, we had 22 stores. Today, we have around 80 stores and expect to have 180 by 2029. The foundation that we've built on gives us confidence that we can quicken the pace of the stores in absolute terms. If we zoom in on where we have stores today, it reveals that we have plenty of room to grow. I've met many of you.
A lot of you call New York City home, and there we just have three stores, where many of our competitors or other sportswear brands have double-digit number of stores in that city. Our expansion starts with intention on where we open before the format. Depth in the cities that matter amplifies our reach, not necessarily a flag everywhere. Our own retail store serves as a role model for our franchise and distributor-managed stores globally. One key learning from the past few years runs against instinct. Bigger stores drive higher sales productivity, not lower. I'll say it again, I know it's maybe five-ish. Bigger stores are more efficient, not less. This is really clear from our strategic investment that premium environments are actually yielding results. We've heard we can scale more doors. Larger and more premium doors yield higher productivity.
And apparel, where we believe we can further raise our productivity in our store fleet. This is quite a statement, as we have actually already increased our average productivity by 1.5x since 2023. As you can see on the chart here, our footwear productivity is already very high, above the luxury and premium benchmark. We are very proud of this productivity, and we deliberately did not model this improving much further.
Apparel and accessories sits at roughly half of this level, and this is where the opportunity lies. If we look towards 2029, we expect that our apparel sales productivity more than doubles, but still sits well below footwear. We have already started to shift this. We have opened a new generation of fleet that features a stronger apparel-led journey in our stores. With this, we already see at least a 50% increase in the apparel share versus the existing fleet.
It doesn't stop there. We will continue to elevate across our entire store fleet through these three pillars. First, store experience, creating inspiring premium environments in our prime locations. Two, customer excellence, high-end, memorable journeys for anybody who walks in the door, and three, operational excellence. Not glamorous, but really what drives a lot of things behind the scenes and makes the other two possible. This is very much the high-level version. I can appreciate that. Underneath is a long list of small things that someone like Alice or I could talk about all day. Visual merchandising from head to toe, clear navigation in store, optimizing assortments, smarter placement of accessories. None of these look like much on their own, but they add up over and over in how we increase our productivity.
We are in the early rollouts of these initiatives, but we see that our store Net Promoter Score in those that we have reached out has already increased by five percentage points. Where we see proof of this is in our most scaled fleet in China. I know many of you guys believe that no sports brand can scale globally without winning here, so I am here to answer some of those questions today. As you know, I have led Asia very recently and have lived in China for the last couple of years. What follows here is firsthand. Before I begin, I want to reiterate that we are on track to achieve our target of 10% of sales whilst building a brand that is deeply connected to our fans. We will continue to do three things in this market, which is how we are winning in China.
First, deliberate expansion simultaneous with elevation. Two, disciplined channel management, and three, differentiated consumer engagement. Let me share with you three proof points of each of these. When we expand our door fleet in top cities, we simultaneously elevate our fleet. Next year, we will relocate as many doors as we will add. An example of this is Shanghai and Grand Gateway 66, where we traded from the fourth floor in the sports zone to the ground floor location next to the mall's entrance. 114 sq m of space to almost 300 sq m space, allowing us to provide a wider offering, a more premium experience, and maintain our strong productivity where our customers are already living and where we already have relationships with those customers.
Opening stores in China is not necessarily difficult, but what you can see here, this is what's difficult, to do that over and over and over and over again. These locations are earned, and we've consistently shown our ability to draw traffic and provide a premium experience that is worthwhile of luxury neighbors. The result is very clear in our sales. We will complete our 2023 sales plan in 2026 with a little over half of the doors that we expected in 2023. This strategy needs to be consistent across all channels for this to work, and for On it is. During 618, which is one of China's largest shopping festivals in the first half of the year, On entered top 20 sportswear brand for the first time. We were the only brand doing that at full price. The only brand in the top 20 at full price.
This shows that our discipline and execution over the years is working despite whatever the competition is doing. One string ties everything together, and that's the consumer. We host over 1,000 community events every single year, from running to training to loyalty to membership events in our stores. It's through this that we can engage directly with our fans and become a brand that people love and come back for over and over again. Our position in China is recognized by our partners, by our consumers, and we've earned this position through disciplined execution and differentiated consumer engagement. We are building a brand that is not just known, but also loved in that market. This is what gives us clear air between us and other brands, whether they be global or local.
One last thing before I hand it over to Alice, because I'd rather I answer it rather than you assume it. I see a lot of you guys have your laptops out. A rising retail mix can be sometimes read as margin dilution. Hopefully, we've shown you enough that you can not view our estate this way. Our payback period in retail is around two years today. We are not talking about marketing dressed up as a channel. Our stores are commercially strong, from our largest formats in high-end locations to our community-driven neighborhood stores. With that, I will go from the street to the cloud. Just kidding. That's not my best transition. With that, I'll hand it over to Alice.
Thank you, Rebecca. I'm delighted today to be talking to you as On's first Chief Customer Officer. I want to tell you a little bit about how I was introduced to On. Last year, I signed up for my first marathon. Like first-time marathoners, I didn't know where to start, but a runner friend directed me towards On. My journey took me from TikTok to the brand's Instagram account. I did some further research on on.com. Then finally, I made my way to Lafayette Street. I'm a New Yorker, too, despite the Irish accent, and where they explained to me what it actually meant to train for a marathon, what I should be thinking about, and what I really needed for my running shoes.
On November 1st, I will run the New York City Marathon in my LightSpray Cloudmonsters and a full toe-to-head On look. Firstly, as a customer, and now so proudly as On's Chief Customer Officer. Thank you. There was a lot of strength in that journey, but there was a lot of opportunity, too. Let me tell you a little bit about my background so I can introduce myself. I spent my career building digital. Excuse me. I spent my career building digital and retail businesses that stay true to a brand's vision while putting the customer at the center of absolutely everything that we do.
As Chief Content Officer and Chief Digital Officer at Ralph Lauren, that meant transforming the digital business and building a more connected retail ecosystem, bringing that same sense of brand magic and consistency to experience, regardless of where you encountered the brand, in a screen, on a store. At Burberry, I was proud to be a part of a team that helped transform an industry to digital. I had a front row seat to something that has shaped how I think ever since, and that is really the power of community, how people galvanize around a brand, how cultural relevance creates desire, and how that desire, it becomes lasting loyalty. From my board seat at Zalando, I have had an opportunity to have a completely different vantage point, the ability to watch consumer behavior at enormous scale.
Very few individual brands actually ever get to see different businesses, different moments, but they told me the same thing. The brands that endure treat the relationship as the asset and the transaction as the evidence. It is not the other way around. That is what brought me to On. When I met the founders, I could see so clearly the vision. Quite genuinely, there is magic in the air here, and the combination in front of us is so rare. We have an extraordinary brand. You heard about that from Alex and Gerald earlier. We have extraordinary demand. You have heard about that from Rebecca. Now we have an opportunity to build a much deeper relationship with the people creating that demand. Today, I want to be specific with you about how we can turn that magic into something enduring.
I can be specific because I have built much of this before, and I know what great can look like. What are the four core beliefs we are thinking about as we go through this? Number 1, as I said, putting the customer at the center of everything. It sounds obvious, but as Scott spoke to earlier, this has real implications for how we organize, how we show up, and ultimately, how we make decisions. Our customer does not think in channels. She does not distinguish between, having a retail experience, digital experience. It is a service experience. She simply experiences On. We start from an incredibly privileged position. She already loves the brand. Our opportunity is to take that spark and build a relationship around it.
To understand not only what she bought, but what brought her to us, what she is trying to achieve, and what might inspire her next. That is what being truly customer-led means. Number two, highly personalized, deeply relevant in those environments. Not personalization as a technological capability, relevance that you can actually feel. A site that understands the difference between someone preparing for their fifth marathon and someone exploring running for the first time, like me. A store associate who knows you ran that marathon last weekend, congratulates you, knows the footwear, knows your apparel, and can introduce you to what is up next, and make sure you are a part of our local run club. The benchmark is not a clever algorithm. It is the experience that you get in a brilliant specialist running store with a scale of millions. That is what technology should enable.
Third, let us create belonging for our customers because ultimately, the strongest relationships are not built around transactions. They are built around participation. Football is an incredibly powerful expression of that. The strongest clubs are not simply teams people watch or jerseys people buy. They are a part of people's identity. They create rituals, communities, and a sense of belonging that can last generations. I think there is something really powerful for us in that. We already have an extraordinary community around On. Our opportunity is to connect that physical community with our digital one, giving reasons fans not to simply buy from On, but to participate with On. To keep running, discover, experience, and be recognized by us, and ultimately feel like a part of On. Fourth, we need to connect it all together, connecting our retail environments for our customer. Quite simply, On everywhere.
The experience should be unmistakably On every time you encounter us, and effortless as you move between our channels. Discover digitally, experience physically, build a relationship in store, continue it on our app. Buy in one place, collect another, return somewhere else. The infrastructure can be complex, but for the customer, it has got to be simple. So how do we make that happen, and where do we work to do? Because I want to be clear-eyed with you today, because this is the part of the opportunity that excites me most. The ambition is clear, but there is foundational work that we need to do to unlock it. First, we got to know the fan. Today, personalization is live, but it is early.
We have made a strong start with fans we already recognize, but our understanding of a fan still sits across more than one system, and naturally, that experience is thinner for someone arriving for the first time. Therefore, building that single customer view, it is foundational. Because once we recognize the fan and their relationship at On, we can do so much more with it. We can equip our teams with real customer knowledge. We can turn a retail associate from someone completing a transaction into someone guiding the On experience. Someone who knows what you run in, what you care about, what you just achieved, and what might be relevant for you next. That is how personalization becomes useful. It is not about more messages. It is about better experiences. Secondly, we need to build out our loyalty proposition.
Today, we don't have a loyalty program, and we need to give our fans a reason to belong. That was a sequencing decision, not an oversight. For the past three years, the priority has been product and demand, and that was the right call. But the next chapter is about what we do with that demand. How do we turn a first purchase into a second, a customer into a fan, and a fan into someone who genuinely belongs with us? That's our loyalty opportunity. Third, I mentioned it before, we need to connect our worlds. We have to be intentional about how we build. We have been intentional about how we build our stores and platforms as premium destinations. Now it's time to enable those channels and connect those worlds. This is where the work becomes quite practical.
Clienteling allows an associate to build a relationship with a fan over time. Buy online, pick up in store, ship from store. Real-time inventory visibility. The ability to recognize a fan and serve them regardless of where they choose to interact. Individually, they can sound like operational capabilities. Together, they fundamentally change the customer experience. The customer never sees the complexity underneath, they simply experience ease. I have seen those capabilities drive true commercial value, improving conversion and inventory productivity, strengthening retention, increasing customer lifetime value, and creating a much more powerful relationship between stores and digital and our customer experience. On has already seen the evidence of the value here. In our key markets, fans who engage across both retail and digital yield up to 4.5 times the lifetime value of single channel shoppers. So we know the multiple.
What we haven't yet built is the machinery to deliberately create more of those fans. That is just one reason why I believe D2C will continue to expand as a share of our business. There's foundational work for us to do here, but we are not building those foundations simply to catch up. We are building them so we can accelerate from foundation to differentiation and a true On spirit to leadership. But critically, this work can't stop at the edge of the channels we own because our customer doesn't. That takes me right back to my partner, Rebecca, who's going to talk to you about wholesale.
Thank you, Alice. As Alice said, our customer doesn't see channel. They see the brand in many different environments, and wholesale is the environment where they meet On for the first time. I was clear at the start of this session from our numbers that the wholesale growth is an important contributor and the biggest absolute net sales contributor of our future growth. Wholesale authenticates us with the communities that made this brand and helps us to also reach new audiences. Our wholesale growth, much like our retail growth, will be driven by space and comp growth. From 2023 to 2026, we were in the phase of opening large key accounts for the first time, Dick's Sporting Goods, Foot Locker, JD, and driving rapid premium growth as a challenger brand.
The next phase will be about deepening these partnerships, establishing new verticals, and elevating brand presentation to become the clear leader in the premium segment. As evidenced, we have already gone from 20% of doors in 2023 to 50% today. Looking towards 2029, we have significant runway in these key wholesale partners across all of our regions to around 75%. While we could easily be in all doors tomorrow, 75% is the premium distribution that we believe fits our brand. Beyond door growth, we also see an opportunity in comp growth through three key pillars. The first is deepening and diversifying our product verticals, riding momentum that we already see in tennis and sneaker and what you have heard about earlier today.
As an example, we have already become a true Gen Z lifestyle staple in Europe, driven by the explosive growth of the Cloudtilt franchises, the number one brand in some stores, all across Europe and Asia and the Americas. Alex also spoke about the power of new sports to drive awareness and to reach a younger and more diverse audience, which has not connected to On in the past.
This net new consumer will drive sneaker growth and the apparel business at a premium price point in a way that none of our existing sports does today, particularly with a strong impact in Europe and the Americas. Second, we want to strengthen our key partnerships. Deeper collaboration with those partners who share our ambition, whether that is a run specialty account or a global retailer. Joint planning, joint investment, and investing for the long run. There is proof of that already.
Here you can see an example of one of our Japan run specialty training events, tech sessions that we did on the Cloudboom Strike two. From this event, we already saw 52% sell-through on that product in the first month, and we are doing this at scale and across markets, driving true commercial impact. The third is elevating our premium positioning. This is making sure that the shared standard is across all of our doors, and particularly elevating that concept with tailored store shop-in-shop concepts in some of our top doors. An example here you see is On in KaDeWe in Berlin, where once the shop-in-shop was introduced, it increased our sell-through by triple digits versus the year before, and we achieved over 35% plus apparel share. In order to fuel this growth, we will continue to investing in how we service this channel.
Building dedicated teams for distribution like run specialty, sneaker, and global accounts, because we know that these three need different people, different products, and different levels of conversations. Where we see this come to life is at scale in the Americas, particularly in the U.S. market, where our expansion is actively shaping and expanding the premium segment. We are the brand that is prompting consumers to trade up into the premium segment and bringing new consumers into the fold. We are both driving the market's growth and elevating its standard. We have already done this today in general sporting goods, and now we are seeing it unfold in sneaker as well. We are also at the start of tapping into our new verticals. You heard today about golf and football.
These are two categories where our wholesale partners already have highly engaged, sizable audiences that will allow us to efficiently reach a new audience and increase our shelf space inside both new and existing doors. Despite heightened promotional activity recently in the market, our brand equity and our brand commitment has remained unchanged. As we said before, in the U.S., we have the highest average selling price and the lowest discount rate in the industry. Our premium growth has been driven by partners who share that premium vision, and we know that our premium growth directly accelerates the growth of our partners today. To illustrate this powerful synergy, we want you to hear from our friend in Pittsburgh. You might know him. Please look at this video from Ed Stack, the Executive Chairman of Dick's Sporting Goods.
Hello, I'm Ed Stack, Executive Chairman of Dick's Sporting Goods. I'm pleased to share a few thoughts with you today about the terrific partnership we have with On. In recent years, On's become an extremely important strategic partner and growth driver for our business. The relationship started small. On first started selling in our outdoor specialty store, Public Lands. Today, On's available across Dick's and Foot Locker, and it's resonating across our customer base. From the Dick's customer base focused on sport and running, to the Foot Locker customer drawn to the lifestyle side of the business. Our customers are also responding to the newness and innovation, and we're seeing that strongly on the On Cloudtilt products. As we look forward, we see a tremendous opportunity to partner and grow the business beyond footwear.
Today, our teams are working closely as On expands existing categories and into new sports like football and golf, two of the largest categories in our business. We also see a meaningful opportunity to bring On's story to life in our stores in ways that will excite customers and draw new ones into the brand, particularly at our House of Sport concept, which is our premium, highly experiential concept that's helping change the way customers experience retail. At Foot Locker, we've rolled out our Fast Break stores, which offer new and improved opportunities for storytelling across the merchandising spectrum. A couple of weeks ago, I visited Caspar, David, Scott, and the team at On Labs in Zurich. Seeing their innovation work firsthand reinforced my confidence in the strength of the product pipeline across so many categories.
More importantly, it further solidified my excitement about this partnership and how we can do this together and grow on a global scale. We're proud and fortunate to have a partner like On, and even more energized by the opportunities ahead to inspire athletes and serve consumers around the globe. Thank you for the partnership. We really appreciate it, and we look forward to the future together.
To round this session out, I want to take you to Europe, where we see the omni-channel Premium Playbook already in action. Specifically in Italy. If we take ourselves to what Alex and Gerald were sharing, we first start with athletes. Our partnership with Football Federation and Flavio Cobolli in tennis has helped broaden our reach and strengthen and build our performance credibility. We have paired this with run activations around Milano Marathon, co-created campaigns with Foot Locker and other partners, and especially with taste makers in the sneaker space, which has strengthened our engagement and helped us to reach a younger audience. Our Milan flagship also opened in 2024, which has established itself as an anchor point and home for our brand. We are also hosting lots of events as well.
This strong momentum with our strategic wholesale partners and investment in brand activation, it is translating into our own channels, especially in D2C. The results are here. One, 50% revenue growth in our store, followed by strong double-digit year-over-year growth thereafter. Our wholesale partners continue to grow at strong double-digit year-over-year growth. Our Italy e-commerce business has more than doubled, and our cross-channel consumer, as Alice says, is delivering up to 4.5 times customer lifetime value. This is what compounding looks like in practice. The momentum can start through our brand or our partners, channel that resonance into local relevance, build demand, which compounds across our channels. We know we have said a lot, so this is what you can expect from our partnership in the next few years. We are going to be expanding retail globally, as well as driving apparel.
We are going to be deepening the connection with our customers and with our retail environments. We are going to accelerate penetration in new and existing doors, and we are going to capture our fans in new sports, as well as bring their audiences into all of our channels. We are confident that the exceptional product, powerful brand demand, captured through our expanding footprint, will drive high-quality earnings over the next three years. Premium is the guiding principle that touches all of those touch points. As we scale, our plan is that D2C will compromise 50% of our business, while wholesale delivers sustained growth through both new space and comp store performance. Ultimately, we are turning our customers into lifelong fans. With that, we are going to pass over to Frank. Thank you so much. Thank you so much.
Thanks, Rebecca. Thanks, Alice. Hi, everyone. Now probably the session where most of you have been waiting for all day. The numbers and how it all adds up. Before we go there, I would like to say two things. First of all, it has been great meeting all of you in the last two days here in Zurich. Come to our office and basically meet our team. I know you are here mostly as analysts, investors, but I think the objective of today was to really give you a sense of what is behind the numbers, the people, the products, and the way we work, and the methodology, the Premium Playbook. Therefore, I want to start with a big thank you to the On team who made the day happen.
Now, a special thanks to two people that you know for long, Gérald and Liv, who have been the architects of the session. I do not know where they were. Where they are. Liv is actually mastering the slides, so she is clicking up there somewhere. A huge thanks for making it happen. Now let us dive into the content. Caspar, David, and Scott explained how the movement class is emerging and how this is opening a large TAM of CHF 125 billion today. That TAM is growing fast, faster than the industry average. That is our first belief. By being premium, we generate demand, and with that demand, we generate growth. As Thilo mentioned, it is and, not or. It is premium and growth. We also took you through the Premium Playbook and all the individual elements.
When all of these five moves are working in sync, innovative products, inspiration, storytelling, premium experiences, it creates a baseline for exceptional financial profile because it creates pricing power. That is what On is about. Visible in our ASP, 1.4 times the industry average, which Rebecca mentioned as well, which we maintain with our full price strategy and the lowest promotional rates in the industry. That is the second core component of the playbook, growth and margin. Again, "and", and we believe it is compounding. Earlier today, David and Caspar took you through the past, hyper-growth and durable growth. As you see on the screen and read in the release this morning, for 2026, we expect to deliver around CHF 3.5 billion at a full-year growth rate in the low 20% range.
As Caspar mentioned, I wanted to give some additional color on quarter three. We are happy with how the business has performed in line with our plan. As we previewed in quarter two results, this included actions that we took on the wholesale side and which would be visible mostly in quarter three in our third-quarter results in the wholesale channel. Together with the continued strength of our DTC channel that we see today, we expect, therefore, to achieve around 17% constant currency growth in quarter three. That is the short-term. That brings us today back to the long term, where this day is about. Many people say few brands can actually break the $5 billion mark. The reality is, we may exceed that point somewhere next year. That also means we are today a company of scale and ready to scale further.
We have a clear Premium Playbook how to execute across all the verticals we have been talking about today with a global retail footprint, with a global supply chain, and with increasingly robust functional processes. The point is, we have built a platform from which we can scale further. You have seen all the innovations, the new sports, and with that, we believe we can compound. David and Caspar took you earlier today through the financial performance over the last three-year period, and that has been a remarkable performance. Of course, with that, On is already operating today at a significantly larger scale than we envisioned in 2023. More important is the numbers are an outcome. It means the strategy works. Beyond our 2026 targets, you will recall the long-term ambitions that we also set in 2023 based on three key strategic priorities.
And we are happy to report strong progress on all three. On apparel, of course, we report on that. You have visibility throughout. With the plan that we laid out today, we are on track to achieve the 10% target over the next three-year horizon. On retail, Rebecca explained 2026 will be the first year with over 10% retail share. For China, Rebecca explained through the strategy, we have meaningfully increased our share, and we are closing in on the 10% mark, and we expect this threshold to be exceeded before 2029. So strong progress underpinning our growth, and these three areas will remain key focus areas going forward. Therefore, our strategy of premium growth is merely an evolution rather than a revolution. It is an evolution of a philosophy that Olivier, David, and Caspar started almost 17 years back at their kitchen table, that they explained.
It is an evolution. Let me explain the premium growth model in a bit more detail, as it is the core of the financial strategy. Number one, multidimensional top-line growth. As explained, the movement class provides the opportunity, and we are uniquely placed to capture this opportunity. Multiple verticals built on disruptive innovation, authenticity, and premium. Three strong regions and three strong channels. Secondly, industry-leading gross margin. Our Premium Playbook enables strong pricing power, and we showed early the ASP and our full price strategy, which we are committed to just as much in our next growth horizon. Third, significant operating cost leverage and productivity gains. We have invested in a thoughtful and disciplined way to bring us to the scale that we are today, and with functional capabilities now mostly in place, we can start driving productivity and leverage.
Together, these three will drive compounding EBITDA growth and strong free cash flow generation. Together, a high-quality earnings compounder at scale. Turning this into numbers. In short, as you have seen, we continue to dream big, and we have credible building blocks to deliver an ambitious plan. Here is what we are building to towards 2029. High teens net sales growth in constant currency, compounding from 2026. At current FX rates, this implies at least CHF 5.6 billion. It is also important to look at absolute scale. In our next phase, we intend to add more absolute scale with the CHF 2 billion than we have done in the previous periods. We intend to achieve a gross profit margin of at least 65%, among the highest in the industry, and to reach an adjusted EBITDA margin of 22% or better through material SG&A leverage.
That would result in an EBITDA compounding at more than 20% a year. Now, the font size represents the importance to us. It is the outcome of the Premium Playbook and means a high earnings compounder at scale. CHF 5.6 billion at current spot rates means we have a plan laid out to approach approximately $7 billion in 2029. That brings me to another topic. We intend to move to U.S. dollar reporting as early as 2027. As you know, the majority of our net sales, product costs, and operating costs sit outside Swiss francs, and reporting in francs has meant a significant part of what you see every quarter is translation. Moving to dollars puts the reporting currency closer to the economics of the business and aligns to our share price currency.
We believe that will enable you to have more clarity in understanding the results and how we communicate to you going forward. As you will appreciate, it is a significant undertaking from a systems and process point of view, but we will update you on the timing, the transition, and the restated history well before it happens to ensure you have everything you need in order to make that transition with us. Again, the ambition is to do it as early as 2027. Brings me to the composition of the growth. We have a plan for over 75% of the absolute net sales addition to come from the three key priorities you have heard a lot about today. Run, lifestyle, led by our sneaker ambition, and apparel. Run is about performance-led innovation.
It is the origin of On, and it is the vertical where we invest the most of our R&D capabilities, as you have seen yesterday. Gerald showed you the technical evolution and also the intuitive segmentation of the portfolio, which will make consumer navigation much simpler. We have LightSpray across the majority of our franchises. We started as a running company. We will accelerate as a running company, there is no doubt. Moving to the largest TAM, lifestyle. Within this, sneaker is about cultural relevance. Thilo showed the horizontal tech transfer from the track to the street, and with the Cloudtilt franchise, we have step changed our reach into Gen Z, and with that into the global sneaker accounts. That gives a platform for future growth. Apparel is about winning with her. You have seen the clear segmentation, dedicated essentials and premium active.
With two commercial benefits, apparel increasingly an entry point for new consumers into our brand and a way to expand the share of wallet with existing customers. With that, our ambition on apparel is to triple the business over the next three-year horizon. Other verticals we have talked less about, as they are smaller in absolute size, but not in growth and not in importance. These verticals are training, tennis, outdoor, young movers. They are built with the same rigor, disruptive innovation, validation, and premium. These verticals provide further growth resilience to our overall growth trajectory. Let me also give some context on the new sports, because there is a temptation to model them large. David explained it very clear. We enter a category if we can disrupt it with innovation, if we can be authentic, and if we can premiumize. We are convinced we can.
LightSpray is disruptive. The selective, and I will say it again, the selective roster of the greatest athletes on the planet is there, and we will launch at the premium end. The TAM for dedicated products is substantial, but we will build it slowly and steadily with care for the decades to come. 2027, we will start with limited drops, and in 2028, we will start with inline portfolios for cleats and some performance all-day products. As important, as our athletes in football are also brand ambassadors, we also aim to deliver an halo effect on the other verticals. Of course, it will drive brand awareness. Golf, you have seen it as well, is a new sport we are very excited about.
As Caspar mentioned, our customer already wear On on the fairways, and for years, many customers have been asking, "When do you come with dedicated products?" As you've seen, we will enter with existing credibility, but obviously in a TAM that is a bit smaller. Hence, in total for the new sports, we are modeling a modest contribution from new sports over the three year horizon. Again, on the new sports, they relate to dedicated products and exclude an halo effect on the rest of the business. Switching to the regional and the channel view, we want to provide some directional guidance on how we are planning the composition through 2029. As Rebecca and Alice mentioned, we see strong opportunities in every channel and also in the regions where we started early.
This, as our portfolio is widening across verticals, our segmentation within the verticals is becoming increasingly clear, as in particular you saw in running and apparel, and our commercial capabilities still have meaningful room to grow, as Alice explained. Let's get into it. We're planning for Americas to grow in the low to mid-teens, EMEA in the high teens to low 20s, and APAC in the mid to high 20s. Rebecca showed in much more detail what's behind these numbers. In summary, starting with Americas, as you've seen, we still have meaningful potential to grow our door count with our key wholesale partners, as well as with the specialty accounts for the new verticals. Beyond that, we see tangible opportunities for same-store growth, extending our shelf space through both existing and new verticals.
Retail growth is planned to be our fastest growing channel as we still have many cities uncovered. For e-commerce, growth potential lies in the ambition to grow brand awareness to 50%, as well as further growth in our omni-channel capabilities, as Alex explained. Brings me to EMEA. I expect this is the region where we exceed your expectations possibly. Whilst the growth drivers are the same as for the Americas, the reality is that our market share in Southern Europe, in Eastern Europe, in the Benelux, and in Scandinavia is around half of what it is in DACH and the U.K. That gap is now starting to close, and that's why you see good growth rates today in EMEA, which we expect to continue in the planned period. In APAC, we are being very intentional in how we expand to further elevate our premium positioning.
Rebecca talked about it. In China, we are building our store fleet consciously, and it's a combination of more stores, but also upgrading our store locations as a result of the trust we have earned in the market. Turning to our channels. We spoke through the role of the channels earlier, and each one has a significant importance over the next three years, and they're complementary. With the ample opportunity we have in terms of retail footprint and the levers on driving e-com, we do see the opportunity to drive our DTC share towards the 50% mark. Important to note, we see growth opportunities in all channels that elevate the brand, and that means the channel split is an outcome, it's not a target. Gross margin, whilst we guide from 65%- 65%, it's not a margin at rest, it's a margin at work.
As mentioned before, it is a cornerstone in our financial growth model. There are four drivers that I would like to highlight. We expect margin accretion to come from channel mix, which you all know. Next to that, we expect continued operational efficiencies. We have made significant steps here over the past three years. Our growing scale has led to sourcing and manufacturing efficiencies, and our planning processes have improved, leading to better inventory management. The journey continues as we grow scale. An example is digital product creation to enable or to reduce physical sampling or, for example, further automation with our manufacturing partners. We expect to reinvest the savings into two areas. One is product. Leading by innovation and by undisputed product quality is a non-negotiable in our premium growth model, and that is why we plan for this in the financial construct.
Let me just give you two examples. Our new generation of running products with Super Foams, it exceeds every competitor product. For example, we talked about it, LightSpray being closer to consumer. We will not compromise on quality and on investments in product, and we have built room to invest in our margin profile. The second one is category mix, which is mostly around apparel. Apparel today is subscale, and whilst the long-term margin outlook is sound, our margin will also improve in the planned period. It is the fast growth of the category that will be an investment in the margin rate. In summary, it is a margin at work, not at rest, and it is a core input to our financial premium growth strategy. Turning to EBITDA margin, we plan to grow our adjusted EBITDA margin from today's 19.5% to 20%-22%.
As mentioned this morning, these numbers are excluding any tariff refunds in 2026. In our financial model, we do not include a material contribution from gross margin expansion, which means that we intend to deliver the EBITDA margin expansion largely through operating efficiencies and leverage across our SG&A cost base. Starting with distribution. We indicated in 2023 we would focus on this, and we have delivered. From 13.4% in 2023 to 10% in half one this year. In the next phase, still to come, is a full automation ramp-up of our Atlanta facility, and at the end of the year, we plan to combine two legacy hubs into one automated facility. Therefore, over the planned period, we see opportunities of at least 1% or more. Turning to marketing. As you saw throughout today, we have big plans.
Nevertheless, from a baseline in 2026, where we are seeing already upfront investments into our new sports, we have the opportunity to achieve efficiencies over the next three-year horizon. The key is what you heard from Alex, being selective, creative, and maximizing the impact of our spend through storytelling and organic reach. That brings me to G&A, a key focus area. I know you have not seen visible efficiencies before, but I do want to stress that if you take out currency in the past three years, there would have been a reduction of around 1%. Going forward, as we have been scaling for growth and have set up many functional capabilities in the past three years, it is now time to work on efficiencies through automation as well as drive operating leverage.
In finance, we are deploying AI tools today, and we are scaling volume in a rather stable team. Another one is our indirect procurement function that is still emerging and has potential to come. Coming to selling expenses, there you see an investment, and that is merely a consequence of our growing store network, and the expenses are booked in this line. I do want to note once more that our retail profitability, including these costs, sits comfortably above the group adjusted EBITDA number and our growth in this channel is not hindering the company margin. All in all, the SG&A benefits are built on a comprehensive plan, a key focus area, and it is based on productivity and operational leverage. Let us move to the capital allocation policy. Our premium growth model is producing cash. The next question is: how do we deploy it?
Let us first look back. A consistent trend indicating the quality of our growth, our P&L management, and discipline in networking capital and CapEx investments. We moved from CHF 0.5 billion cash in 2023 to CHF 1.2 billion today, and we have been net cash throughout. More than doubling our cash in a period of strong growth. Looking forward, we will continue to allocate our cash in a logical order. First, organic growth. The largest investment we have planned is our retail expansion with a target of +100 stores, that you saw earlier today. Retail remains one of our highest returning investments, with a cash payback of less than two years and the channel comfortably above the group adjusted EBITDA.
Another area will be technology and infrastructure. All these investments are facilitated by robust business cases focused on growth or efficiencies. These are the core investments, fully funded. Second, a strong balance sheet.
By that, I mean maintaining a net cash position. Here we are prudent, Swiss, combined. A strong balance sheet is what allows us to keep investing through cycles. We will keep net cash. Third, as mentioned by David earlier this afternoon, returning excess cash to you, our shareholders. That brings me to something we have not done before. We mentioned this morning, we have received authorization to repurchase shares of up to $1 billion US during the course of 2026 to 2029. Again, everything in our plan is funded in full. We continue to operate at net cash, and this program comes on top. It is an outcome of our premium growth strategy, which includes a strong translation of adjusted EBITDA to free cash flow, and as a high-quality earnings compounder, this will continue.
At the start, I said On is a high-quality earnings compounder, and I will close on the same sentence because you have now seen all three parts of it. High quality, the demand is multidimensional and premium. Three large verticals, run, sneaker, apparel, as the highest impact growth drivers. A number of smaller verticals, as important, growing fast, and new sports, which we build for growth well beyond the plan period. Every region growing, every channel growing. That is why high teens on a base of CHF 3.5 billion is a number we plan for. Earnings. Premium comes from brand strength and pricing power. It produces a gross margin of at least 65%, and that allows reinvest in our innovation power and brand experience, as David explained. It funds itself. Compounder.
I mentioned it, we are closing somewhere next year on the CHF 5 billion mark, meaning we are a company of scale. A global footprint, strong commercial capabilities, and robust operations. You've had the opportunity to see the breadth of our innovation pipeline, our ambition on new sports, which we can efficiently scale and which will compound our earnings. There is a reason we keep using the phrase Premium Playbook. The five interconnected moves deliver an attractive financial outcome. It's a strategy that our founders chose from the start and have maintained it with discipline since. It lets us redefine what a sportswear brand can be. Thank you. With that, we want to open for the Q&A in the room, and I will ask David, Caspar, and Scott to join me.
Thanks. Good job.
Yeah.
A lot of hands.
Questions.
We spoke for four hours, and you still have questions? Let me have two mics.
Great. Thank you. Thanks for putting everything on here. Clearly, the theme of premium growth was evident throughout the day. I want to ask a little bit differently about really shifting to a consumer focus in everything you are doing. Could you share a little bit more about that shift, how that plays out, and speak to some of the opportunities that you see.
Yeah, I can take that. If you look at the last few years, we have had an incredible business model. Alex can talk about it, the brand awareness we have been driving, and it has been relatively simple to then capture that demand. I think as you go into new areas and you get into this new growth phase, Gérald mentioned it as well, we now have 14 customer mindsets. We really need to understand each of them and their confidence level, as Alex talked about, to then convert. That is the next phase that we are going into. Alice talked about it, we have got the data, but we have not built any of the tools yet to truly understand how to drive loyalty, personalization, all those sort of things.
If you look at it just from a pure consumer lens, we are going from a very big loudspeaker that is driving a lot of brand heat, and we are capturing the demand, to now that loudspeaker is becoming very surgical. Very surgical. That allows us to really have the confidence that we can deliver this premium compounding effect across all the verticals that we have got. So that is consumer facing. When you look internally, what does that mean? If you look at many other brands, and I am sure you study them all, they become very siloed as they get bigger.
Very, very siloed, and everything is handed off to each other, from innovation to product, to sourcing, to marketing, supply chain, customer service, retail, wholesale partners. That makes the whole thing incredibly slow. We have pivoted those silos that way. The consumer is there, and everybody is facing the consumer.
That is the model that we have built. All of our priorities, we actually are already, and we have been for some of them nine months now, some of it six months, we run QBRs, which are all cross-functional teams, all delivering on that consumer insight for the plan. It is not one function. It is all the functions within the business. We have people from the U.S. calling in, the whole lot. So it fundamentally changes not just how we talk to consumers and how we keep them and how we bring them back and achieve those LTVs that Alice and Rebecca talked about. It fundamentally changes how we work internally. So that is the big shift, and we have been going through that now for about six months.
Maybe have a question from that side, so we go kind of go back and forth.
Good afternoon. Laurent Vasilescu from BNP Paribas. Thank you very much for a great presentation today. I wanted to ask about DTC, the growth, the comment about 100 stores. I think in the past you talked about half the openings would be in China, and the balance would be between the other regions. How do we think about that evolution? I think you mentioned also about relocations, as many relocations next year as openings, which I thought was very interesting. How do we think about that for year two, year three for the 2029 target? Thank you.
We will not give specific guidance of the number of doors per region, as you might understand. It will probably somewhere as we have done historically. I would expect. That is, I think I would say first. In terms of the expansion overall, personally, I think it will be rather linear. If anything else, there is not a reason why it would not be as such. On China, we are extremely excited that we have a combination of door growth, but also relocation, as the latter is providing significant growth.
I think over the last years, we learned a lot in retail, and Rebecca mentioned it. We learned that bigger is better. So also from an economics perspective, and it also gives us the opportunity with bigger stores now representing the different aspects of the brand. You have probably seen that in the past, especially also smaller stores have, to a large extent, been footwear, and apparel was an add-on. That is turning now. So we found out that we can represent 70% of apparel in the store, and 30% of footwear in terms of display. But then the return is inverse, so we are getting much more sales from footwear, but then still a significant growing uptick in apparel as well.
It is about the mix, and it is about the space and the floor to also represent some of our new verticals and doing more justice to them, how they are represented. It is all about the storytelling, the innovation storytelling to really serve the customer first and put the customer in the center.
Hi. Alex Drayton at Morgan Stanley. Thanks for having us today. I had a question on that fun chart on the path to CHF 7 billion in revenue in the next few years. Of the core piece, can you just help us understand the starting point? And then for the run, lifestyle, and apparel within it, are those three equal contributors as we think about the path, or is one more important or two more important than the other? Thank you.
Thanks, Alex. Broadly, to come straight to the point, broadly, they are about the same in terms of size. That is how we look at it. Also means all three of them are super important and reinforcing. I think performance run, basically the translation of the tech and lifestyle, and then apparel, we all believe they complement, and I think that is where you would probably take over.
Yeah.
Yeah. To give more color.
Thanks, Alex, for the question. I think you're probably also asking what's the jump-off point, right? We've reached our guidance for the year. I think a lot of people have been very obsessed with the growth percentage, but I think what we demonstrated today is the actual term of the growth, and I think you should focus on that. We're planning to add more business over the next three years than we did in the last period.
Roughly the numbers that you've shown. We're going to continue to execute this year as well as we can, and hopefully reach the highest possible jump-off point. Very soon from now, we will update you, give you a deep insight into our Q3, which is under good progress right now. Be with patience with that. Think about the overall number of business that we want to have.
Thank you, Adrian Yee from Barclays. Thank you for doing all the presentations, putting all the time in. My first question is on the brand awareness chart. It was a global brand awareness number of 30%. Can you break that down by region? Can you help us understand, when you open either a retail store or go into doors, which of those gives you the biggest return on brand awareness to get to that 50%? Secondly, for Scott, can you talk about LightSpray? In the journey over 2029, how much of the supply chain is embedded in that moving over to LightSpray technology? Thank you.
I can probably take the first part. We're not breaking down awareness by market. What I can tell is, this is the 30% is, of course, from the markets where we're currently operating in. We expect to see a significant brand lift from everything that we're doing. To your channel question, channels will be a key part of that uplift. We meet customers where they are. When you think about the communities that we have been talking about, some of these communities probably come more to our direct channel first. When you think, for example, about premium active and apparel, probably our retail channels are best positioned to show that full proposition, and then also bringing it over to our D2C, to our e-com business. While when you think about sneaker, the sneaker community is clearly predominantly with our wholesale partners.
That is a great channel to help this awareness uplift in the sneaker community through our wholesale partner. Meaning we do not care which channel it is, we care where the community is, and then to do the work together with our wholesale partner or in our own channels to capture that opportunity in the very best way in terms of narrative.
On the question, and maybe coming off of David's one and the multiplication effect we see of the omni-channel, which we truly have not built yet at scale, I think that is where we do not fully know yet exactly which channel drives what. We do know that the LTV is significant when we get that right. I think that would be the add-on to that one. On LightSpray supply chain, if I understand the question correctly, how does the current supply chains feed into that? Is that the question?
The horizon 2050.
We have done a lot of it already. We obviously have a factory here in Zurich. We have a factory in Korea. We have got other factories that are under construction right now. We believe the economics, when you see how many laborers on that line, the economics make sense for it can go anywhere. The reality of what we want to build is, and really leverage it, is not the supply chain benefits per se of less labor. What we want is the proximity to the consumer. Back to the first question, which is on a premium strategy, if you can forecast much closer to the consumer demand, if you could pivot very well, not only can you drive more full price sales, you have less inventory and less closeout stock and volume. Right?
We are thinking in those terms to the Premium Playbook, much more than just how does the supply chain evolve. We are thinking about it from a consumer lens, and we are thinking about it from a margin lens. I think hopefully you all go away from here believing, because you have seen it for your own eyes, that you could probably drop what you see anywhere in the world, and it would run pretty well.
Thank you. Rick Patel from Raymond James. Great presentation today. I wanted to better understand the building blocks of growth as we think about pricing versus units, and as we think about the elevation journey and premiumization story, how much of that pricing change would come from potentially like for like increases versus innovation versus changes in the revenue mix?
Happy to take that. If you go back to the On Premium Playbook, we are not just raising a price because we can, but basically it starts with an innovation and that creates pricing power. Frank has shown this quite well on his chart. We are also reinvesting some of the margin that we are capturing through some of the operational leverage that we have through supply chain into a better product. That will allow us to raise prices. Now, to break this down a bit, it is probably you have to differentiate between our performance product and our sneaker product, and then our premium active higher priced lifestyle products as well. Generally speaking, we will not take prices down. I think that is off the table. We have different playbooks on to which price points we design.
In performance, what we have seen is that the aperture is opening up. I can give you an example. We have a really strong response to Cloudmonster three, and that comes in three versions, regular Cloudmonster Hyper, and LightSpray Cloudmonster Hyper. A very large share, much more than we expected. Not quite half, but somewhere between 40% and 50% of Monster is in these higher priced versions, which is much more than we expected. We have actually been chasing the units to go after that. What we are seeing is that if a consumer perceives, they can feel the difference between a regular Monster and the Hyper, they are willing to pay the CHF 50 more or whatever the number is.
In performance, we want to open up the aperture and have an entry-level price point probably around CHF 160, something CHF 200 plus, and then something closer to CHF 300. In sneaker, the bands are narrower. We also don't want to price kids out of the market. That's not our intention. But we definitely want to always be the premium option. Then, of course, in, say, a Roger lifestyle business with real leather, if you look into a premium department store in China, will people be willing to pay CHF 400 for a pair of exclusive Roger in leather? Of course. That's how we're thinking about it.
Thank you. Aneesha Sherman from Bernstein. I want to ask about growth versus margins, and I know a big message of your presentation has been growth and margins. But as you take a step back, the sector around you is becoming more competitive, more promotional. The categories that you're growing in tend to be more promotional, lifestyle, apparel, and as you said, you're hitting that CHF 5 billion mark soon. You're becoming a big guy in this market. So how do you think about the risk and the trade-off between growth and margin? Do you think you'll have to make that trade-off at some point in this forecast period? What kind of full price selling percent is embedded into your guidance?
Yeah. Maybe I can tee this off. I just don't think that holds true. The premium playbook and other industries have applied it. If you look at, say, consumer electronics, what Apple has done, they have done both. They are super high margin, highest price point, highest market share. You have done the same at Dyson. You're too modest to say that. So I think what it comes down to, and I think that's what your question is leading to, it's discipline. We're educating our consumer not to expect a sale from us. So we're going to fulfill that promise. As long as we stay the course on the premium playbook, this is not a tension of either/or. It's an and it's actually reinforcing. That's how we think about it.
Probably to add to that, I think you also have to look at that from the movement class opportunity. We feel that the whole industry is really changing, so you shouldn't anchor it in the classical mainstream sports model, but really think about how this market is changing and how this opens up as well. You mentioned it in presentation, there's even now the tailwind of the luxury industry losing 80 million customers. Where do they go? So I think between kind of the price mainstream model and the luxury model, which we're both clearly not, there's a huge opening already opened up, but now with the tailwind of consumers really kind of want to have aspirational but accessible price points. So I think that's the secular shift that we're seeing.
We have 10 questions for three minutes. It's going to be interesting.
Hey, thanks. Paul Lejuez, Citi. I want to ask about the wholesale channel, specifically a little bit about the U.S. wholesale channel. Multi-part question, but all related. Can you talk about what's going on? You've already limited some of your sell-in as a result of what you're seeing out there. How short-term do you view that dynamic? When do you expect to accelerate? I think you've said third quarter marks the low point in terms of limiting the sell-in. Then how should we be thinking about the first half of 2027 in terms of that U.S. wholesale business, but really the wholesale business overall?
Yeah, we've still got to obviously close Q3. So what we did see from our own actions that we took in Q2, then we got to work really doing the things that I talked about last night before we kicked off the innovation tour and what we talked about today. We got out to really focus on customer and customer sell-through and storytelling about our differentiation. We know that when On gets that right, we can, I wouldn't say weather any storm, but we have a very good response when we bring that to bear in the best way that we've got. So I think that's the actions to particularly our U.S. team took with a little bit of help from here, but mainly the U.S. team really driving that. I think that shows the power of the brand when we execute really, really well.
So we're really confident about even in a tough market, can we make our voice heard even when it's very promotional? We've seen that certainly come through in Q3, and that gives us more confidence. When does the market recover from that? I don't truly know exactly. You probably know better than me exactly how much inventory the big guys have got. There's some other. There's some brands, and particularly in lifestyle, that we see that is going down. Our lifestyle is going up. To be honest, we just focus on ourselves and what we can do to truly differentiate and make sure the customer really sees what our differentiation is in wholesale. I think you heard a little bit of that from Ed as well in terms of some of the activations you see in his video were all Q3.
Yeah. Maybe if I can add to that. Frank, you mentioned how our planning capabilities have improved a lot. We have basically day-by-day sell-through information from our wholesale partners. What is a bit special about the current situation is that as we are really kind of like, we want our retail partners to have our wholesale partners to have a certain amount of days of inventory, right? If there is, like say, an event like the World Cup happening that people spend elsewhere, or there are promotions. We see that in this case, with all our running franchises updating shortly. We do not have that much runway, right? That is why we managed it very tightly. Through, I would say, the middle of next year, this generational update of running franchises will be over, right?
Then most of these shoes will be brand new to market and will have 18 months of life. We can be a bit more flexible, and we will have more runway to sell through even. Right now, you spoke to them. The U.S. consumer, it is up and down. We had a really strong back to school. But Q2 was weak and it is sometimes reading tea leaves, right? There is just a lot of things happening in a macro environment. We always want to be on the safe side, so I like to keep supply a bit below demand. Sam, you have had your hand up for a while.
Thank you very much. Sam Poser with Williams Trading. You talked about the SG&A on the selling expenses going up, and you talked about that related to new stores. Let us talk about that related to U.S. wholesale and the support mechanism needs on the ground for that, and what kind of spend and where you are with that. That is the main thing. The other question related to that was the plan that was brought up to get to 75% of the JD and Foot Locker stores. Getting items placed is different than having good sell-through. I think, but you need those. What are you doing with the ground game to make sure you get the right stuff in the right place versus just trying to get to a 75% sell-in, which we will see how that goes. That is that.
You answer the first one and I will do the second one. Thanks, Sam. I will indeed answer the second one, and I will hand over to Scott on the. Sorry. The first one, and I will hand over to Scott for the second. You are right. I think there is improvement for us to improve basically the capabilities, how we manage key accounts. We will invest in that. We have also seen in recent days that it pays off. There is a good return on that. I do not think that is going to change the picture, right? Yeah. But it is a clear opportunity, for growth.
That is what we see. Close collaboration. You know as well, I think, as anyone does, we have come from a period of growth where the demand was almost whatever we produced, it would go in the stores. Now I think we get to a broader portfolio.
The segmentation therefore is really clear now. I think the next step is to get that really right presented in wholesale. That will drive strong organic growth. That will require some investments, but that is built in the plan.
On the penetration of doors. That number is not just a number that Rebecca sort of finger in the air. You heard from Ed. Ed and his whole team, including Dick's and the Foot Locker banners, were here. We had an amazing day. It was not niceties. We were going through details of plans and road maps of all their upgrades that they are doing in terms of their CapEx deployment to premiumize a lot of their doors. We are following in line with where we know that works for the brand. Where it does not work for the brand or it does not work for them, we are being very cautious. We have got detailed plans across all banners, all doors, investment, and we understand store space. We are almost at the level of understanding what we would merchandise in each of these new doors as well.
That level of plan. It is a true strategic partnership, and we have got that with some of the other big wholesale partners as well. It is a detailed plan before we came to you and shared that.
The point about the people on the ground. Do you actually know the. Sorry. Do you actually know the difference between, let us say, what is going on on 34th Street Foot Locker and what is going on in Washington Heights, which I saw one of the pictures of, or Harlem. With the different consumer that is in those markets, not we want that consumer, but you could do exceptionally well in some stores and not in others, and other things are fingers crossed. You are allowing Dick's or Foot Locker or these retailers to tell you the story that sounds really good because you are a hot brand and they want the shoes. You have got to know. The brand belongs to you, not to them.
And that's where I just want to know how much you really know what's going on at store level, and do you have the people out there to report back to say, "Flatbush Avenue in Brooklyn's no good for us, but 34th Street, we should put more shoes in.
Yeah. It's not just people either. We get weekly sell-through data from all the partners to not even franchise level, to color level. We can see, and we review it every single week on sell-through for wholesale. We do know, and we don't just need to send an army of people out there.
We have time for one more question before drinks.
I took the mic, so sorry about that, everyone. I'm a buy-sider, so I'll ask a different question that's much more high level. Kelly Granat, Lone Pine Capital. Great day. Thank you so much for the depth of the presentations and seeing the breadth of the team. Super impressive. Curious about the anchoring of the apparel strategy to her, and I'm curious the context underneath that. To me, it seems like a big opportunity across the board, and I'm curious if that comes from an observation around that part of the market being underserved in your estimation, or early traction you've gotten from the launch of your apparel businesses and seeing more engagement from females versus males. Just what underpins the anchoring of apparel to her versus just apparel being a big pillar for the company?
Yes, excellent question. We have seen the three different dimensions of apparel up here. It is dedicated, which is performance. It is essentials, which also allow us to go broader, and then it is apparel for her. While the other two brackets, we continue to scale, and that is also pretty broad, apparel for her, premium active for her, we see that as an opportunity. If you think about what we talked before, that space that is opening, and if you see also a little bit of a sea of sameness in premium active right now, where it is matchy-matchy pink, we believe that there is an opportunity to go beyond that and to have not, and I think Alex mentioned it, not the sporty girl, but the woman who wants to express through sport. That is a different identity.
You saw that identity firsthand in the fashion show tomorrow, and also in the store. We feel also it is a different price point. So it is definitely not a luxury price point. It is also not what you have seen in a Loewe price point, but it can be a step up from just the normal price points that you see in premium active right now. It is a consumer there. We touched on it before. It is 80 million luxury customers that are about aspirational. It is a consumer there. So we see a blue ocean and not a red ocean, and that is where we jump into.
Wow, a lot of questions. A long day. If you allow, we will close the Q&A. David, why don't you say some final remarks about the day?
It is a pleasure. You have spent a day with On. We have spent a day with you, even a great evening and a great dinner. You have seen the products. You have seen the innovation. You have heard the strategy. You especially also have met the people who build it, bring it to market, and run the business. I think that is super important. You have seen the caliber of people at On. You have heard from Frank what the Premium Playbook is designed to deliver as a high-quality earnings compounder. Very important. When Olivier, Caspar, and I started On, there were three of us around that imaginary kitchen table over there. But today, we are a global company with thousands of people, millions of consumers, and a playbook that has taken us from a single running shoe to a global sportswear brand.
We are still founders, so we have continuously been accountable for dreaming, important, building, and directing this company, and we are committed to do what comes next than to anything. We are more committed to do what comes next than to anything we have done so far. Frank joined us to help architect the financial discipline this next phase demands. You heard him today. The ambition is clear. Grow the top line at a very high rate, protect our premium economics, you have seen them, and grow earnings even faster than sale.
What remains is to say thank you. Thank you, first of all, to our teams. It takes about six months to pull together an Investor Day like this. I hope you felt that. I hope you felt that we did it with intention. I hope you felt a bit the On Premium Playbook at work also in how we interact. It also, your lens helps us get better. It is almost like an athlete-coach relationship in a way. We are very grateful. We are very grateful for the huge turnout that we have had, for the engagement. Every little break, every coffee break felt like a Q&A in its own. I hope you got everything you wanted from us, you need from us. We will take, like, a three-year break until the next Investor Day. With that, thank you.
We are closing the official part, and I think we have drinks and food on the way. Thank you so much for coming out.