The news: On Running raised its full-year outlook following a blockbuster Q1, a sign that it expects consumers to remain willing and able to pay top dollar for its premium sneakers.

• The company now expects sales growth of 28% in 2025, 1 percentage point higher than its previous forecast (although a smidge lower than what analysts were anticipating).
• That updated outlook comes after a record April for the Roger Federer-backed brand, and 40% constant currency sales growth in Q1.

The caveat: On’s outlook assumes that the current universal tariff rate of 10% holds steady—a premise that could backfire should the Trump administration opt not to extend the pause on reciprocal tariffs that’s currently set to expire in June. Anything higher than that could be a problem for the company, given that it relies heavily on Vietnam (previously subject to 46% duties) for sourcing.

The opportunity: Even with its tariff exposure, On has more breathing room than its peers thanks to its premium positioning, the strength of its niche, and growing popularity with consumers.

• The company is leaning firmly into the first by introducing higher-priced products, such as the latest iteration of its Cloud sneaker, which retails for more than its predecessors.
• On will also begin raising US prices on select styles in July as it tries to further elevate its brand while mitigating the impact of tariffs.
• That’s despite already selling the most expensive running shoes, on average—which says a lot about On’s confidence in both its product and consumer demand.

Our take: Premiumization holds obvious appeal for sportswear brands, allowing them to raise prices and burnish their appeal to wealthier consumers. That’s why companies like Under Armour and Nike are leaning on it as a key pillar of their turnaround strategies.

But it does come with its share of risks—namely, alienating less affluent shoppers who are more sensitive to higher prices.

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