Swiss sportswear maker On Holding is navigating a delicate balancing act: it delivered better-than-expected third-quarter sales and lifted its profit outlook, while simultaneously trying to contain a public-relations backlash in China tied to its newest brand ambassador, soccer star Kylian Mbappé.
The company, known for its cloud-soled running shoes and premium pricing, said it is in a “listening and learning” mode in China after Mbappé’s comments referencing Mao Zedong drew sharp criticism on Chinese social media. Co-CEO Caspar Coppetti told Reuters that On is in talks with government officials, landlords, and Mbappé’s team to manage the fallout.
A strong quarter, but a tricky market
On’s third-quarter sales came in ahead of Wall Street’s expectations, and the company raised its gross margin forecast for fiscal 2026. That suggests the brand’s core business remains healthy, with demand for its running shoes and lifestyle products still growing in key markets like the U.S. and Europe.
But China is a different story. The country is a major growth opportunity for Western sportswear brands, and On has been investing heavily there. The backlash over Mbappé’s remarks threatens to undermine that progress, especially at a time when foreign brands face heightened scrutiny from Chinese consumers and regulators.
The timing is particularly awkward because On has leaned heavily on celebrity endorsements to justify its premium price points. Tennis legend Roger Federer, who took a stake in the company in 2019, has been a central figure in its marketing, and actress Zendaya has fronted recent campaigns. Mbappé was signed in September as part of that strategy.
Why celebrity marketing matters
For a brand like On, celebrity ambassadors aren’t just about advertising — they’re a core part of the business model. The company sells shoes at prices well above many competitors, and it needs to convince consumers that the brand stands for something more than just performance. A star like Mbappé, one of the most recognizable athletes in the world, helps create that aura.
But that strategy cuts both ways. When an ambassador makes controversial comments, the brand can get dragged into the controversy. In China, where nationalist sentiment can flare quickly, a misstep can lead to boycotts or regulatory pressure. On’s response — engaging with officials and partners while staying publicly humble — is a common playbook for Western companies facing such situations.
The company’s decision to raise its margin outlook suggests management believes the China issue is manageable, at least for now. But investors will be watching closely to see whether the backlash affects sales in the region over the coming quarters.
What it means for investors
For everyday investors, the key takeaway is that On’s underlying business appears strong, but it faces a specific risk in China that could dent future growth. The company’s raised margin forecast is a positive signal, as it suggests management is confident in its pricing power and cost controls.
However, China is a significant market for many global consumer brands, and any sustained backlash could hurt On’s revenue there. The company’s ability to navigate this situation will be a test of its management team and its brand resilience.
Investors should also note that On’s reliance on celebrity endorsements is a double-edged sword. While it helps drive premium pricing, it also exposes the brand to the personal actions and statements of its ambassadors. This is a risk that isn’t always reflected in financial models.
Looking ahead, the market will likely focus on On’s next earnings report to see if the China controversy has had a measurable impact on sales. The company’s raised margin guidance is a good sign, but it doesn’t fully address the reputational risk.
For now, On is trying to thread the needle: keep its premium brand image intact while smoothing over a diplomatic misstep in one of the world’s most important consumer markets. Whether it succeeds will be a story worth following.
