On Holding: The Swiss Running Revolution
On Holding AG (NYSE: ONON) is a Swiss performance athletic brand best known for its distinctive CloudTec running shoes with the signature hollow pods on the sole. Founded in 2010 by Olivier Bernhard, Caspar Coppetti, and David Allemann in Zurich, On has grown from a niche Swiss running brand to a global athletic powerhouse.
The company sells premium athletic footwear, apparel, and accessories across multiple channels:
- Direct-to-consumer (DTC): On's own website and retail stores (highest margin channel)
- Wholesale: Specialty running retailers, department stores, and sporting goods chains
- Brand partners: FKT (trail running), tennis collections with Roger Federer (who is also an investor)
On generated approximately CHF 2.1 billion (~$2.3 billion) in net sales in 2024, with exceptional gross margins of ~60% — among the highest in the athletic footwear industry. The company has expanded beyond running into tennis, hiking, outdoor, and training categories.
Business Model: Clean and Straightforward
On Holding's business model is about as straightforward as it gets from an Islamic finance perspective:
- Design innovative athletic footwear and apparel
- Manufacture through third-party suppliers (primarily in Asia)
- Sell through DTC and wholesale channels
- Invest in performance marketing and athlete sponsorship
There is nothing inherently impermissible in this model. Athletic footwear is a universally permissible consumer product. On does not operate financial products, casinos, alcohol businesses, or any other prohibited venture.
On's apparel line (shorts, shirts, performance wear) is fully permissible. The company's marketing focuses on running performance, outdoor sport, and active lifestyles — all aligned with Islamic encouragement of physical health and fitness.
Revenue Analysis
On's revenue composition:
- Footwear: ~85% of revenue (running shoes, trail, tennis, hiking)
- Apparel and accessories: ~15% of revenue (growing category)
- Geographic breakdown: Europe (~35%), Americas (~45%), Asia-Pacific (~20%)
100% of On's revenue is from athletic goods sales. There is no interest income of significance, no financial services, and no involvement in any prohibited industry. This is among the cleanest revenue profiles of any publicly traded company.
Financial Health: Debt Analysis
On Holding has a conservative balance sheet typical of a brand-focused growth company:
- Total debt: Minimal (primarily operating leases for retail stores)
- Cash and equivalents: ~CHF 700 million+
- Net cash position: positive (cash exceeds debt)
- Debt-to-market-cap: well under 5%
- Interest expense: negligible
On Holding passes every Islamic debt screen by a wide margin. The company is net-cash-positive and has essentially no interest-bearing debt. This is one of the cleanest balance sheets among major consumer brands.
Sharia Screening Results
| Screening Criterion | On Holding Result | Status |
|---|---|---|
| Business activity (athletic footwear) | Fully permissible | ✅ Pass |
| Alcohol revenue | None | ✅ Pass |
| Tobacco revenue | None | ✅ Pass |
| Gambling revenue | None | ✅ Pass |
| Interest income <5% | Negligible | ✅ Pass |
| Debt-to-market-cap <33% | <5% | ✅ Pass |
| Adult content | None | ✅ Pass |
| Defense/weapons | None | ✅ Pass |
On Holding vs. Other Athletic Brands
| Company | Primary Revenue | Halal Status |
|---|---|---|
| On Holding (ONON) | Premium running footwear | Halal ✅ |
| Nike (NKE) | Athletic footwear & apparel | Halal ✅ |
| Lululemon (LULU) | Athletic apparel | Halal ✅ |
| Deckers (DECK) | Footwear (HOKA, UGG) | Halal ✅ |
| Skechers (SKX) | Footwear | Halal ✅ |
Athletic footwear and apparel is one of the cleanest sectors for Islamic investors. All major players in this space pass standard Sharia screening.
Growth Outlook and Investment Considerations
On Holding's growth trajectory is exceptional:
- Revenue growing ~30%+ annually
- Direct-to-consumer channel expanding rapidly (higher margins)
- Tennis and outdoor categories adding new customer segments
- Strong brand equity in the $300+ premium performance segment
- Roger Federer partnership (investor and brand ambassador) provides credibility
Risks include: premium pricing vulnerable to consumer spending downturns, increasing competition from Nike (HOKA brand), Adidas, and other challengers, and geographic concentration in Europe/Americas.
Our Verdict: HALAL ✅
On Holding (ONON) is one of the most clearly halal large-cap consumer brands available on public markets:
- ✅ Core business (premium athletic footwear) is fully permissible
- ✅ Net cash position — essentially zero debt concern
- ✅ No involvement in prohibited industries whatsoever
- ✅ Passes all standard Islamic screening criteria
- ✅ Supports physical fitness — aligned with Islamic values
For Muslim investors seeking growth-oriented consumer brand exposure, On Holding is an excellent candidate. The business is clean, the balance sheet is strong, and the brand is on a compelling growth trajectory.
Conclusion
On Holding exemplifies what a halal-friendly company looks like: a clear, permissible product (athletic shoes), strong financials with minimal debt, and no involvement in prohibited activities. Whether you're a Muslim investor or simply someone who appreciates ethical investing, ONON deserves serious consideration for your portfolio.