Gross margin hit 65.4 per cent, the highest in the industry. Investors sold the stock anyway. The reason sits in one sales channel and one region. Asia carries the quarter Asia-Pacific sales grew 54.7 per cent in constant currency to CHF 170.5 million. Frank Sluis, CFO of On Holding, said growth was broad-based with Japan, Korea and Greater China all performing. “This market exceeded our expectations in every channel, with a great contribution from our stores and particular strength on Tmall, despite our choosing not to participate in promotional activity,” he said.  The company opened its first Macau store in the quarter, which Sluis said was already matching the momentum of On’s Hong Kong stores, with more shoppers who walked in ending up buying something. The company is targeting 100 stores in China. Tokyo now supports two stores. In Tokyo, it now runs two, and says neither is stealing sales from the other. The wholesale decision Wholesale sales rose to CHF 461.9 million, up 12.7 per cent in constant currency, however roughly half the 25.1 per cent constant-currency pace of the first quarter. It also trimmed full-year constant-currency growth guidance to the low-20 per cent range from a previous floor of at least 23 per cent. The company says it did this to itself. American shoe shops are discounting heavily, and On’s everyday running models were not selling off the shelves fast enough. So On shipped fewer pairs to them. “In wholesale, the sell-out of some of our everyday running franchises tracked below our ambitions in a highly promotional multi-brand marketplace, particularly in the Americas,” co-founder and co-CEO David Allemann told analysts. “Clearly, this is something we are not pleased with. Most importantly, we choose not to build in-channel inventory that could compromise our full price integrity.” Sluis, on his first earnings call, put the trade-off plainly.  “It costs us some wholesale growth, but it protects our partners’ inventory health, our premium positioning, and ensures the best position for launching what we believe are outstanding innovations in 2027,” he said. Allemann reached for precedent, recalling On’s decision early in its listed life to prune over-distributed European accounts. “Many questioned us then. Today, that discipline is delivering exceptional 21 per cent constant currency growth and record Q2 group margins,” he said. “EMEA proves that premium growth isn’t bought through volume. It’s forged through restraint.” What the market heard However, investors are concerned about signs of weakening demand. America’s net sales, which account for more than half of the group total, grew 13.0 per cent in constant currency, down from 17.1 per cent in the first quarter. That is a second consecutive quarter of deceleration in On’s largest market. Jefferies analyst Randal Konik, who rates the stock underperform, told WWD that softening US sell-out in everyday running reads as a demand signal rather than purely a sell-in choice. Citi analysts, quoted by Reuters, said the sales miss combined with soft implied second-half guidance would weigh heavily on the shares. Costs are climbing faster than sales, too. Selling, general and administrative expenses reached 51.3 per cent of net sales, up from 49.1 per cent a year earlier. Sluis cast the mix as deliberate: distribution costs fell to 10.0 per cent of sales, funding marketing at 14.0 per cent.  “Discipline earns the margin, and the margin funds the future,” he said. The 2027 outlook  Almost everything management talked about points past this year. The Cloudsurfer 3, built around a new foam called Surreal, starts reaching specialist running shops in October. Sluis said orders for it from retailers who attended On’s summit in Paris doubled after the event. LightSpray, a technique that shapes a shoe upper using a robot, is now running out of automated plants in Busan and Zurich. Allemann described it as no longer an elite prototype but a fast-scaling commercial engine. On will make its case at an investor day in Zurich next month, its first full strategy update in three years. Allemann says the company is on track to close 2026 as the fastest-growing global brand and the one with the highest gross margin in its industry.  Sluis closed the call with the line management wants remembered: “Strong growth, industry-leading margins, and a compounding financial profile.” The market’s answer, for now, is a share price at a two-year low. Further reading: On Holdings’s premium discipline is standing out in a market reordering itself.