Mbappe has boosted the visibility of the On brand, but there are still many challenges on the road to success in football

Danielle Kaye/Angela Christy M

Reuters New York, September 18 - On Holding AG 49G.BN last Friday made a high-profile entry into the football world by signing French star Kylian Mbappé, a move that boosted this Swiss running shoe brand's recognition as it ventures into the sport.

But in the fiercely competitive football market, On faces the challenge of turning this highly publicized partnership (link) into actual sales growth. The brand is currently confronting a slowdown in its key market—the Americas (link). Now its goal is to accomplish what competitors have not: gradually weaken the dominance of Nike, Adidas, and Puma in football. Mbappé had previously collaborated with Nike for nearly two decades.

Famed for its distinctive "hollow pod" sole, On reported second-quarter net sales last month that missed expectations, raising concerns among investors about the company's slowing growth—even though it continues to grab market share from Nike NKE.N and Adidas ADSGn.DE. Its stock price has fallen by about 40% so far this year.

Still, according to data from London Stock Exchange Group (LSEG), the company’s price-earnings ratio of 18.7 is slightly above its sportswear rivals, highlighting investors’ high expectations for future growth. Data from M Science shows that in the three months to August, On's market share rose while Nike's continued to slip.

After venturing into tennis through its partnership with star Roger Federer, On is now looking for its next growth engine. Columbia Threadneedle senior equity analyst Mari Shor said that On’s foray into football comes at a time when competition in the sportswear industry—both in products and marketing—is intensifying.

However, the football market is a tough nut to crack.

"Football is one of the hardest categories to break into, and performance credibility isn't something you can buy with money," said Jefferies equity analyst Randy Konik, adding that partnering with Mbappé suggests that On will need to "invest even more to sustain growth”.

At this summer's FIFA World Cup, Adidas sponsored (link) 14 national teams, while Nike and Puma sponsored 12 and 11 teams respectively.

In a statement, On mentioned that its LightSpray robotic manufacturing technology, currently used in running shoes, will be a key advantage as it moves into football boots.

On declined to disclose the financial terms of the deal with Mbappé, but said the structure involves both cash and equity. According to Forbes, Roger Federer received about 2.5% equity in On when he left Nike to join the company in 2019.

Success Remains Uncertain

On has also hired former French star Thierry Henry as director of football operations. The company's US-listed shares fell 0.3% in choppy trading Friday, signaling that investors were unconvinced by its high-profile push into football. Amid consumer challenges from inflation and economic uncertainty, the brand's performance in the Americas (which accounts for more than half its revenue) has continued to decline.

Morningstar analyst David Swartz pointed out that while Mbappé provides huge publicity, "the key question is whether the deal is worth it—and its cost is certainly significant."

Analysts noted that Under Armour’s UAA.N partnership with basketball star Stephen Curry helped the company land a position in basketball, but failed to reach the cultural impact or commercial scale of Nike’s Jordan Brand. Both sides have agreed to part ways in 2025 (link). In Europe, Under Armour has tried to get a foothold in football as well, but the brand has struggled against Nike, Adidas, and Puma.

"We think this is similar to Under Armour’s partnership with Curry: it’s a reminder that a single top athlete does not guarantee success in a category," Konik said.

However, independent retail consultant Bruce Winder noted that signing Mbappé will strengthen On's credibility in football. He added that the move could bring more trouble for Nike, whose efforts at business rejuvenation appear to have stalled.

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