Swiss shoemaker On Holding AG plans to double sales to 3.55 billion Swiss francs ($3.85 billion) by 2026, targeting fast growth in China as it seeks to become the world’s “most premium” sportswear brand. 

The company has ambitions beyond 2026 of pulling in more than 10% of its net sales from China, as well as from its own network of retail stores and from apparel products, it said in a statement Wednesday. Those goals underpin efforts to expand sales of its running, tennis and training shoes and apparel by more than 20% annually in the back half of this decade while ratcheting up profitability.

The targets are greater than the company outlined in its IPO and are “an intermediate step in our ambition to build a much bigger company in the future,” co-Chief Executive Officer Martin Hoffmann said. The stock rose 2.7% in premarket trading in New York.

The new long-term targets “should satisfy investors,” Baird analyst Jonathan Komp said in a note, citing “a high degree of confidence in current business fundamentals.”

On is one of a few sports brands, along with Hoka and Brooks, that have posted dramatic growth in recent years, benefitting from the twin global trends of a greater awareness of fitness and acceptance of casual dress, while also eating into the market share of veteran giants like Nike Inc. and Adidas AG. 

The smaller brands have gained foothold with serious runners and specialty stores, taking advantage of their bigger rivals’ heavy emphasis on direct-to-consumer sales.

Fitness and Tennis

On, founded in 2010, initially gained a cult following in its home market and elsewhere in Europe thanks to its shoe’s distinctive tubular cushions on the sole and backing from tennis champion Roger Federer. Since its 2021 public listing in New York, the Zurich-based company also rapidly built a consumer base in the US, the world’s biggest sports market. Until now, its China division has remained tiny compared to those of its bigger rivals. 

On shares are up 8.3% since the IPO, while Nike and Adidas are down 40% and 45% in the period.

While On still sees room to grow market share in running, it’s also focusing on expanding in countries like China and building out its customer base in fitness and tennis. The company reiterated its goal of reaching net sales of 1.76 billion Swiss francs this year and at least 58.5% gross profit margin. –BLOOMBERG