Why is On stock sliding today?

Shares of On Holding AG slid 4.1% in pre-open trading to reach $35.98 after the Swiss performance sportswear brand reported Q3 2026 results that, on the surface, showed a significant earnings beat but were heavily distorted by a non-recurring tariff windfall.

Adjusted EPS of CHF 0.54 topped the CHF 0.38 consensus estimate by CHF 0.16, yet the entire outperformance was attributable to a one-off CHF 52.6 million U.S. tariff refund that inflated the reported gross margin to 72.6% — a figure that fell to 66.9% once the refund was excluded, versus 65.7% a year earlier.

Revenue of CHF 931.4 million came in only marginally ahead of the CHF 929.82 million consensus, representing 17.2% year-over-year growth, and the company reiterated its full-year constant-currency net sales growth target in the low-20% range.

The market’s negative reaction was compounded by the unchanged underlying profitability outlook: On left its adjusted EBITDA margin guidance at 19.5%–20.0% excluding the tariff refund, meaning the operational earnings trajectory offered no upside surprise to offset the one-time nature of the profit beat.

The company did raise its full-year gross margin forecast to approximately 67.5% (or about 66% excluding the refund) from a prior target of at least 65%, but analysts had entered the print with high buy-side expectations, supported by pre-earnings constructive notes from Telsey Advisory Group, Piper Sandler, and Cantor Fitzgerald — all carrying Outperform or Overweight ratings and price targets in the $43–$46 range. The gap between headline numbers and underlying fundamentals left the stock vulnerable to a sell-the-news reaction.

The broader market backdrop provided little cushion for ONON. The S&P 500 was only marginally positive at +0.1% and the NASDAQ edged lower at -0.2%, reflecting a mixed session that offered no sector-wide tailwind for consumer discretionary or growth-oriented names. Within the athletic footwear and sportswear space, On’s selective wholesale sell-in strategy — which moderated wholesale net sales growth to 12% in the quarter — also raised questions about near-term channel dynamics heading into the fourth quarter, even as management guided for an acceleration in Q4 sales.

Taken together, the premarket decline reflects a classic "quality of earnings" concern: while On’s headline numbers technically beat expectations, the market quickly identified that the one-off tariff refund masked flat underlying margin progression, and the absence of any upgrade to core profitability guidance failed to justify the elevated expectations priced into the stock ahead of results. With shares still trading well below their 52-week high of $51.08, investors appear to be reassessing the pace at which On’s operational leverage will materialize.